Exhibit 10.4
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PWRW&G Draft of
1/9/97
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of January, 1997 (the "Agreement
Date"), between ITHACA INDUSTRIES, INC., a Delaware corporation ("Ithaca"), and
the undersigned individual (the "Executive").
The Executive has been employed by Ithaca for a number of years and
is currently employed as the Chief Executive Officer of Ithaca.
The Executive possesses an intimate knowledge of the business and
affairs of Ithaca, its policies, methods, personnel and operations.
The Board of Directors of Ithaca (the "Board") recognizes that the
Executive's contribution as an executive officer of Ithaca to the growth and
success of Ithaca has been substantial and desires to assure Ithaca of the
Executive's continued employment in an executive capacity and to compensate him
therefor.
The Executive is willing to commit himself to serve Ithaca on the
terms herein provided.
In consideration of the foregoing and of the respective covenants
and agreements of the parties herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT
(a) Ithaca hereby agrees to employ the Executive, and the
Executive hereby agrees to serve Ithaca, on the terms and conditions set forth
herein.
(b) The employment of the Executive by Ithaca shall be for the
period commencing on the Agreement Date and expiring on December 31, 1999 or any
extension thereof agreed to in writing by Ithaca and the Executive (the
"Expiration Date"), unless such employment shall have been sooner terminated as
hereinafter set forth. For purposes of this Agreement, the term of the
Executive's employment hereunder shall mean the period commencing on the
Agreement Date and ending on the Date of Termination as defined in Section 7(e)
hereof.
2. POSITION AND DUTIES
During the term of the Executive's employment hereunder, the
Executive shall serve in the capacity of Chief Executive Officer of Ithaca. In
such capacity, the Executive shall have supervision over, and responsibility
for, the business of Ithaca and shall report to the Board, of which the
Executive shall be a member. In addition, the Executive shall have such other
powers, duties and
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responsibilities as may from time to time be prescribed by the Board; provided
that such other duties and responsibilities are consistent with the Executive's
position as Chief Executive Officer of Ithaca. The Executive shall perform and
discharge, faithfully, diligently and to the best of his ability, such duties
and responsibilities. The Executive shall devote substantially all his working
time and efforts to the business and affairs of Ithaca; provided that, to the
extent consistent with the needs of Ithaca, the Executive shall be entitled to
expend a reasonable amount of time on civic and philanthropic activities and the
management of his own and his family's business investments and activities,
subject to compliance with the provisions of Section 11 hereof.
3. PLACE OF PERFORMANCE
In connection with his employment by Ithaca, the Executive shall be
based at Ithaca's office at Highway 268 West, Wilkesboro, North Carolina,
subject to travel requirements in the ordinary course of the conduct of Ithaca's
business. Ithaca shall promptly pay (or reimburse the Executive for) all
reasonable moving expenses incurred by the Executive relating to a change of his
principal residence in connection with any relocation of such office to a
location more than 25 miles from the Wilkesboro, North Carolina.
4. COMPENSATION
(a) BASE SALARY. During the term of his employment hereunder,
the Executive shall receive a base salary at the rate of $490,000 per annum,
subject to increases, if any, in the sole discretion of the Board ("Base
Salary"). Base Salary shall be payable in substantially equal monthly
installments. Any increase in Base Salary or other compensation shall not,
without the consent of the Executive, limit or reduce any other obligation of
Ithaca hereunder and, once established at an increased specified annual rate,
the Executive's annual Base Salary hereunder shall not thereafter be reduced.
(b) INCENTIVE COMPENSATION. In addition to Base Salary, during
the term of his employment hereunder, the Executive shall be eligible to
participate in any incentive compensation arrangements maintained generally by
Ithaca from time to time for its other senior executive officers (the "Plans").
The amount of any additional compensation payable to the Executive pursuant to
this paragraph will be paid to the Executive in accordance with the terms of the
Plans.
(c) EXPENSES. During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board from time to time for Ithaca's senior executive
officers) in performing services hereunder, provided that the Executive properly
accounts therefor in accordance with Ithaca's policy. Ithaca shall make
available to the Executive (or
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reimburse the Executive for the cost of leasing) an automobile (which shall be a
current model Lincoln Town car or another automobile of approximately the same
value) and shall reimburse the Executive for all expenses of operating such
automobile (less an appropriate allocation for personal use in accordance with
Ithaca's past practice).
(d) FRINGE BENEFITS. During the term of his employment
hereunder, the Executive shall be entitled to continue to participate in or
receive benefits under all of Ithaca's employee benefit plans and arrangements
in effect generally for other senior executive officers of Ithaca from time to
time. The Executive shall be entitled to participate in or receive benefits
under any life insurance, health and accident plan or arrangement made available
by Ithaca in the future to its executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to the Executive
under any Ithaca benefit plan or arrangement presently in effect or made
available by Ithaca in the future (other than any Plan referred to in Section
4(b) hereof) shall be deemed to be in lieu of compensation to the Executive
hereunder.
(e) VACATIONS. During the term of his employment hereunder,
the Executive shall be entitled to the number of paid vacation days in each
calendar year determined by the Board from time to time for Ithaca's senior
executive officers, but not less than four weeks in any fiscal year, and shall
also be entitled to all paid holidays given by Ithaca to its employees.
5. OFFICES
The Executive agrees to serve without additional compensation, if
elected or appointed thereto, in one or more offices or as a director of any of
Ithaca's subsidiaries; provided, however, that the Executive shall not be
required to serve as an officer or director of any subsidiary if such service
would expose him to adverse physical hazards or adverse financial consequences.
6. UNAUTHORIZED DISCLOSURE; INVENTIONS
(a) UNAUTHORIZED DISCLOSURE. The Executive shall not, without
the written consent of the Board or a person duly authorized thereby, or except
as may be required by law in connection with any judicial or administrative
proceeding or inquiry (provided written notice thereof is given by the Executive
to the Company), disclose to any person, other than an employee or professional
adviser of Ithaca or other person to whom disclosure is in the reasonable
judgment of the Executive necessary or appropriate in connection with the
performance by the Executive of his duties as an executive officer of Ithaca,
any material information known by him (or which should reasonably be known by
him) to be confidential and obtained by him while in the employ of Ithaca with
respect to any of Ithaca's
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products, improvements, formulae, designs or styles, processes, customers,
methods of distribution or methods of manufacture the disclosure of which he
knows or, in the exercise of reasonable care, should know will be damaging to
Ithaca; provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by the Executive) or any information not otherwise
considered by the Board to be confidential.
(b) INVENTIONS. Any and all inventions made, developed or
created by the Executive (whether at the request or suggestion of Ithaca or
otherwise, whether alone or in conjunction with others, and whether during
regular hours of work or otherwise) during the period of his employment by
Ithaca, which may be directly or indirectly useful in, or relate to, the
business of or tests being carried out by Ithaca or any of its subsidiaries or
affiliates, shall be promptly and fully disclosed by the Executive to an
appropriate executive officer of Ithaca and shall be Ithaca's property as
against the Executive, and the Executive shall promptly deliver to an
appropriate executive officer of Ithaca all papers, drawings, models, data and
other material relating to any invention made, developed or created by him as
aforesaid.
The Executive shall, upon Ithaca's request and without any
payment therefor, execute any documents necessary or advisable in the opinion of
Ithaca's counsel to direct issuance of patents or copyrights to Ithaca with
respect to such inventions as are to be Ithaca's exclusive property as against
the Executive under this subsection 6(b) or to vest in Ithaca title to such
inventions as against the Executive, the expense of securing any such patent or
copyright, however, to be borne by Ithaca.
7. TERMINATION
(a) DEATH. The Executive's employment hereunder shall
terminate upon his death.
(b) CAUSE. Ithaca may terminate the Executive's employment
hereunder for Cause. For the purposes of this Agreement, Ithaca shall have
"Cause" to terminate the Executive's employment hereunder upon the Executive's
(A) willful, material, continued and bad faith failure to perform and discharge
his duties and responsibilities hereunder after written notice by the Board,
specifying the alleged failure in reasonably detailed terms and including in
said notice the opinion of a majority of the entire membership of the Board
(excluding the Executive) or such officer that there has been such failure, or
(B) gross misconduct that is materially and demonstratively injurious to Ithaca,
or (C) conviction of a felony involving the personal dishonesty of the Executive
(unless such conviction is reversed in any final appeal thereof). The term
"Cause" shall not include a bona fide disagreement over corporate policy so long
as the Executive does not willfully and materially violate specific, lawful
written directions from the Board, with respect to
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policies adopted by the Board. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Executive (i) a copy of a resolution, duly
adopted by the affirmative vote of not less than a majority of the entire
membership of the Board (excluding the Executive) at a meeting of the Board duly
called and held for the purpose (after reasonable notice to the Executive and an
opportunity for him, together with his counsel, to be heard before the Board),
finding that in the good faith opinion of such majority of the Board, the
Executive was guilty of conduct set forth above in clause (A), (B) or (C) above,
and specifying the particulars thereof; (ii) an affidavit of the Secretary or an
Assistant Secretary of Ithaca stating that such resolution was in fact adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board (excluding the Executive); and (iii) delivery of a Notice of
Termination in the form specified in subsection (d) below.
(c) TERMINATION BY THE EXECUTIVE. The Executive may terminate
his employment hereunder upon thirty (30) days' prior written notice to Ithaca
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean (A)
any assignment to the Executive of any duties significantly different from those
contemplated by, or any material limitation of the powers of the Executive not
contemplated by, this Agreement, (B) any removal of the Executive from, or any
failure to re-elect the Executive to, the position of Chief Executive Officer of
Ithaca, except in connection with termination of the Executive's employment for
Cause, or Executive's incapacity pursuant to Section 8, (C) a reduction in the
Executive's Base Salary or any other material failure by Ithaca to comply with
Section 4 hereof, (D) failure by Ithaca to comply with Section 3 hereof in any
significant respect, or (E) failure of Ithaca to obtain the assumption of this
Agreement by any successor as contemplated in Section 10 hereof. Notwithstanding
the foregoing, no event shall be deemed to constitute Good Reason unless the
Executive shall have delivered written notice to the Company describing the
event allegedly constituting Good Reason and the Company shall have failed to
cure such event within 10 days of its receipt of such written notice.
(d) NOTICE OF TERMINATION. Any termination by Ithaca pursuant
to subsection (b) above or by the Executive pursuant to subsection (c) above
shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.
(e) DATE OF TERMINATION. "Date of Termination" shall mean the
earlier of (i) the Expiration Date or (ii) if the Executive's employment is
terminated (A) by his death, the date of his death, (B) pursuant to subsection
(b) or (c) above, the date specified in the Notice of Termination, and (C) for
any other reason, the date on which a Notice of Termination is given.
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8. INCAPACITY
If, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his duties hereunder
on a full-time basis for six (6) consecutive months or for an aggregate of nine
(9) months in any eighteen (18) month period, and within thirty (30) days after
Ithaca notifies the Executive in writing that it intends to replace him, the
Executive shall not have returned to the performance of his duties hereunder on
a full-time basis, Ithaca may replace the Executive without breaching this
Agreement. Such incapacity will not act to terminate the Executive's employment
under this Agreement.
If the Executive shall become incapacitated within the meaning of
this Section, Ithaca shall maintain in full force and effect, for the continued
benefit of the Executive for the full period ending on the Expiration Date, all
group health and medical employee benefit plans and programs in which the
Executive was entitled to participate immediately prior to the replacement date
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs. If the Executive's
participation in any such plan or program is barred as a result of such
incapacity, Ithaca shall arrange to provide the Executive with benefits
substantially similar on an after tax basis to those which the Executive was
entitled to receive under such plan or program.
9. COMPENSATION UPON TERMINATION OR DURING INCAPACITY
(a) If the Executive's employment shall be terminated by
reason of his death, Ithaca shall pay to such person as the Executive shall have
designated in a notice filed with Ithaca, or, if no such person shall have been
designated, to his estate or personal or legal representatives, in substantially
equal monthly installments, an amount calculated at an annual rate equal to the
Executive's Base Salary at the rate in effect at the time of his death for a
period ending on the earlier of (i) the date one year from the last day of the
month of the Executive's death or (ii) the Expiration Date and Ithaca shall have
no further obligations to the Executive hereunder. This amount shall be
exclusive of and in addition to any payments the Executive's widow,
beneficiaries or estate may be entitled to receive pursuant to any employee
benefit plan or life insurance policy presently maintained by Ithaca.
(b) Notwithstanding any other provision of this Agreement,
during any period that the Executive fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness, the Executive shall
continue to be paid his Base Salary until one (1) year after the Executive is
replaced in accordance with Section 8 hereof, and thereafter, but in no event
after the Expiration Date, the Executive shall be paid an annual amount equal to
fifty percent (50%) of his Base
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Salary, payable pursuant to Section 4 hereof and Ithaca shall have no further
obligations to Executive hereunder, other than as specified in Section 8.
(c) If the Executive's employment shall be terminated for
Cause or if the Executive terminates his employment for other than Good Reason,
Ithaca shall pay the Executive his full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
Ithaca shall have no further obligations to the Executive under this Agreement.
(d) If Ithaca shall terminate the Executive's employment other
than pursuant to Section 7(b) hereof or if the Executive shall terminate his
employment for Good Reason, then Ithaca shall pay to the Executive his Base
Salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, and all legal fees and expenses, if any, incurred by
him in the enforcement of his rights under this Agreement. In addition, in lieu
of any further payments to the Executive for periods subsequent to the Date of
Termination, Ithaca shall pay as liquidated damages, or severance pay, or both,
to the Executive, in substantially equal monthly installments, from the Date of
Termination to the Expiration Date, an amount calculated at an annual rate equal
to (i) an amount equal to the Base Salary that the Executive would have received
in each of his remaining years of employment hereunder if his employment had not
been terminated, multiplied by (ii) Sixty-five percent (65%) for each of such
years, if the Executive's employment terminates during the fiscal year ending in
the third year prior to the Expiration Date, eighty percent (80%) for each of
such years, if the Executive's employment terminates during the fiscal year
ending in the second year prior to the Expiration Date, or one hundred percent
(100%) for each of such years, if the Executive's employment terminates
thereafter.
The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 9 by seeking other employment or
otherwise, nor will the amount of liquidated damages or severance pay payable to
the Executive under this Section be reduced by reason of his securing other
employment or for any other reason.
(e) Unless the Executive is terminated for Cause, due to
Executive's death or the Executive terminates his employment for other than Good
Reason, Ithaca shall maintain in full force and effect, for the continued
benefit of the Executive for the period ending on the Expiration Date all group
health and medical employee benefit plans and programs in which the Executive
was entitled to participate immediately prior to the Date of Termination,
provided that the Executive's continued participation is possible under the
general terms and provisions of such plans and programs. If the Executive's
participation in any such plan or program is barred as a result of such
termination, Ithaca shall arrange to provide the Executive with benefits
substantially similar on an after tax basis to those which the Executive was
entitled to receive under such plan or program.
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10. SUCCESSORS; BINDING AGREEMENT
(a) Ithaca will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Ithaca, by agreement in form
and substance reasonably satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Ithaca would be required to perform it if no such succession had taken place.
Failure of Ithaca to obtain such agreement by the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from Ithaca in the same amount and on the same terms as he would
be entitled to hereunder if he terminated his employment for Good Reason
pursuant to Section 7(c), except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Ithaca" shall mean
Ithaca as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 10 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts are payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee or other designee or, if there be no such
designee, to the Executive's estate.
11. NON-COMPETITION
The Executive agrees that, during the term of his employment
hereunder and for a period of twenty-four (24) months following the Date of
Termination, he will not, directly or indirectly, own, manage, operate, control
or participate in the ownership, management, operation or control of, or be
connected as an officer, employee, partner, director or otherwise with, or have
any financial interest in, or aid or assist anyone else in the conduct of, any
entity or business (a "Competitive Operation") which competes with any business
conducted by Ithaca or by any group, division or subsidiary of Ithaca, in any
area where such business is being conducted, or for which negotiations to
conduct business are pending, at the Date of Termination. It is understood and
agreed that, for the purposes of the foregoing provisions of this Section 11,
(i) no business shall be deemed to be a business conducted by Ithaca or any
group, division or subsidiary of Ithaca, unless not less than five percent (5%)
of Ithaca's consolidated gross sales or operating revenues is derived from, or
not less than five percent (5%) of Ithaca's consolidated assets are devoted to,
such business; (ii) no business conducted by any entity by which the Executive
is employed or in which he is interested or with which he is connected or
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associated shall be deemed competitive with any business conducted by Ithaca or
any group, division or subsidiary of Ithaca unless it is one from which five
percent (5%) or more of its consolidated gross sales or operating revenues is
derived, or to which five percent (5%) or more of its consolidated assets are
devoted; and (iii) no business which is conducted by Ithaca at the Date of
Termination and which subsequently is sold by Ithaca shall after such sale be
deemed to be a Competitive Operation within the meaning of this Section.
Ownership of up to five percent (5%) of the voting stock of any publicly held
corporation shall not constitute a violation of this Section 11.
(a) It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this Section 11
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.
12. NOTICE
For the purpose of this Agreement, notices and all other
communications to either party hereunder provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when delivered or mailed
by United States certified or registered mail, return receipt requested, postage
prepaid, addressed, in the case of Ithaca, to Ithaca Industries, Inc., Xxxxxxx
000 Xxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention: Secretary,
or, in the case of the Executive, to the Executive at the address set forth in
Section F of Appendix I hereto; or to such other address as either party shall
designate by giving written notice of such change to the other party.
13. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is approved by the Board and
agreed to in writing signed by the Executive and such officer as may be
specifically authorized by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, 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 agreements or representations,
oral or otherwise, express or implied, with respect
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to the subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. For purposes of this Agreement, it is
understood that any references to duties, practices, procedures, places,
arrangements, or policies of Ithaca in effect on or prior to the Agreement Date
shall be deemed to be those of Ithaca. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the state referred to in Section F of Appendix I hereto.
14. VALIDITY
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
15. SURVIVAL
The provisions of this Agreement shall not survive the termination
of this Agreement or of employment hereunder, except that the provisions of
Sections 6, 8, 9, 10, and 11 hereof shall survive such termination and shall be
binding upon the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. Unless
otherwise agreed by the parties hereto in writing, any continuation of the
Executive's employment beyond the Expiration Date shall be an employment "at
will" and shall not be deemed to extend the provisions of this Agreement.
16. SPECIFIC PERFORMANCE.
Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of Section 11 would
be inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at law,
the Company shall be entitled to seek equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
17. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
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18. EFFECTIVENESS
This Agreement shall be effective on the Agreement Date. On and
after the Agreement Date, this Agreement shall supersede any and all previously
existing employment or consulting agreements between the Executive, Ithaca or
any of its subsidiaries or affiliates, all such agreements shall become void and
shall have no force or effect whatsoever, and all rights, claims, duties and
obligations under, pursuant to or in connection with any or all such agreements
shall be deemed to have been waived by the Executive in all respects and shall
cease and be extinguished forever, except unpaid amounts that were accrued prior
to the Agreement Date and are not related to, or payable by virtue of,
termination of such agreements.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
ITHACA INDUSTRIES, INC.
By /s/ Xxxx Xxxxx
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Senior Vice President and Secretary
/s/ Xxx Xxxxxx
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Executive
