Exhibit 10.18
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of August 11, 1997
between Xxx Xxxxxx (the "Executive") and County Seat Stores, Inc. ("CSSI"), a
Minnesota corporation, and CSS Trade Names, Inc. ("Trade Names," and together
with CSSI, the "Company"), with their principal office at 00000 Xxxxxxx Xxxx,
Xxxxxx, Xxxxx.
WHEREAS, the parties hereto and County Seat, Inc. ("CSI"), a Delaware
corporation, entered into an Employment Agreement dated as of November 11, 1996
(as amended, the "Old Agreement") and all such parties have determined that it
is in their mutual best interests to enter into a new employment agreement, on
the terms and conditions set forth in this Agreement, which new agreement shall,
effective on the Commencement Date (defined below), supersede and replace in its
entirety the Old Agreement.
NOW THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive and the Company hereby agree as follows.
ARTICLE I
EMPLOYMENT
Section 1.1. Employment. The Company hereby agrees to employ the
Executive in the positions set forth in Section 1.3 hereof, and the Executive
hereby accepts such employment, on the terms and conditions hereinafter set
forth.
Section 1.2. Employment Period. The period of employment of the Executive
hereunder shall commence as of the date of approval of this Agreement (the
"Commencement Date") by the Bankruptcy Court (defined below) and shall end five
(5) years from the Commencement Date, unless earlier terminated as set forth
herein (the "Employment Period").
Section 1.3. Position and Duties. During the Employment Period, the
Executive shall serve as Chief Executive Officer and President of CSSI and Trade
Names, and as a member of the Board of Directors of CSSI (the "Board"). During
the Employment Period, subject to the supervisory powers of the Board, the
Executive shall have those powers and duties consistent with his positions as
Chief Executive Officer and President of the Company and member of the Board as
may be prescribed by the Board, including but not limited to, being responsible
for all facets of the operations of the Company, including administrative,
purchasing, financing, sales distribution, inventory and expense control,
advertising, customer service, products and services, employee and independent
contractor hiring, supervision and termination, strategic planning, expansion,
acquisitions and all other issues affecting the Company, including the selection
of outside legal counsel to the Company. During the Employment Period, the
Executive agrees to devote substantially all of his working time, attention and
energies to the performance of his duties for the Company; provided, however,
that nothing contained in this Section 1.3 shall prohibit the Executive from
continuing as
Chairman of the Board and/or majority (or other significant) stockholder of
Xxxxxx Enterprises, Inc. (it being understood that another person will be the
chief executive officer of such company) and devoting reasonable time and
energies thereto provided that such activities do not significantly interfere
with his duties hereunder and his obligations to devote substantially all of his
working time, attention and energies to the performance of such duties. The
Executive shall neither (i) divulge any trade secrets or other confidential
information of the Company to Xxxxxx Enterprises, Inc., nor (ii) divert any
corporate opportunities of the Company to Xxxxxx Enterprises, Inc.
Section 1.4. Place of Performance. In connection with his employment by
the Company, the Executive shall not be required to relocate or transfer his
principal residence from the West Palm Beach, Florida vicinity. Notwithstanding
the foregoing, the Executive shall spend, on average, not less than three (3)
business days each week in Dallas or such other place where the Company has or,
with the Executive's prior written consent not to be unreasonably withheld, to
which the Company may relocate its executive offices (collectively, the
"Executive Office"), provided that time spent away from the Executive Office on
Company business trips shall be included when determining compliance herewith.
In addition to other expenses covered hereby, the Company shall pay for the
Executive's reasonable travel between his Florida residence and the Executive
Office and shall pay for reasonable meals and lodging for the Executive at the
Executive Office.
Section 1.5. Representations and Warranties of Executive. The Executive
represents and warrants to the Company (i) the Executive is under no contractual
restriction or other restrictions or obligations that are inconsistent with the
execution of this Agreement or the performance of his duties and the covenants
hereunder, and (ii) the Executive is under no physical or mental disability that
would interfere with the Executive keeping and performing all of the agreements,
covenants and conditions to be kept or performed hereunder.
ARTICLE II
COMPENSATION
Section 2.1. Base Salary. As compensation for the performance by the
Executive of his duties hereunder, during the Employment Period, the Company
shall pay the Executive a base salary commencing at an annual rate of $600,000
(the "Base Salary"). The Base Salary shall be increased annually upon the
anniversary date of the Commencement Date in accordance with the federal cost of
living index. The Base Salary shall be payable monthly in accordance with the
Company's normal payroll practices; provided that in any event, Base Salary
shall be prorated for any period of service less than a full month.
Section 2.2. Equity Incentive Compensation. (a) Effective as of the
earlier of (i) the effective date of the Company's plan of reorganization (the
"Plan") and (ii) the consummation date of the Plan (such earlier date being the
"Grant Date"), the Executive shall be granted, pursuant to stock option plans
and agreements containing customary terms and conditions that are in any event
acceptable to the Executive in his reasonable discretion, five
year warrants (the "Executive Warrants") to purchase an aggregate of 15% of the
fully diluted (including, for purposes of determining such 15%, shares subject
to the Executive Warrants) common stock of the reorganized Company (the "Common
Stock"), together with a pro rata interest (the "Additional Executive Equity
Interest"; collectively, with the Executive Warrants and, if applicable at the
time of determination, any Common Stock purchased pursuant to the exercise of
any Executive Warrants, the "Executive Equity Interest") in any other equity
securities issued by the reorganized Company on terms no less favorable than the
best terms offered to other recipients (collectively, with the Common Stock, the
"Equity Securities"), and outstanding on the Grant Date (or otherwise issued
pursuant to the Plan); provided, however, that such 15% shall be subject to
dilution as a result of issuances on or after the Grant Date of (x) Equity
Securities at fair market value for cash (for purposes of this clause (x), it is
understood and agreed that any equity securities issued by the Company to
purchasers of the Notes (as defined in the letter agreement dated June 25, 1997
addressed to CSI from Xxxxxxxx & Company, Inc.) in connection with the initial
placement of the Notes in a transaction for which the Company receives total
cash compensation equal to the Notes' and such other equity securities' fair
market value shall be included as further diluting such 15%) and (y) employee
options to purchase at fair market value on the date of grant up to that number
of shares of Common Stock such that, after giving effect to all such purchases
pursuant to this clause (y) the aggregate number of shares of Common Stock
purchased or available for purchase in all such purchases shall constitute a
maximum of 5% of the total outstanding fully diluted Common Stock of the
reorganized Company; provided further that, except as provided in the
immediately preceding proviso, the Executive Equity Interest shall be entitled
to anti-dilution protection in the event of mergers, recapitalizations, stock
splits and other related events, with such protection to be on customary terms
and conditions that are in any event acceptable to the Executive in his
reasonable discretion.
(b) The Executive Warrants shall vest in three separate tranches (each, a
"Tranche"), with each Tranche covering one third of the Executive Warrants, and
with the first Tranche (the "First Tranche") vesting on the Grant Date, the
second Tranche (the "Second Tranche") vesting on the first anniversary of the
Grant Date, and the third Tranche (the "Third Tranche") vesting on the third
anniversary of the Grant Date, in each case provided that the Executive remains
employed in the positions set forth in Section 1.3 hereof and in all other
respects in accordance with and subject to the terms hereof; provided, however,
that notwithstanding anything to the contrary contained herein the vesting
schedule shall be subject to automatic acceleration upon (i) a Change in Control
(defined below), (ii) the termination of the Executive's employment by the
Company without Cause (defined below) or (iii) the termination of this Agreement
by the Executive for Good Reason (defined below) in accordance with the terms
hereof; provided further that the Executive Warrants shall vest in such a manner
that those with the lowest exercise price vest first, those with the next lowest
exercise price vest second and those with the highest exercise price vest last;
provided further that notwithstanding anything to the contrary contained herein,
if the Executive's employment with the Company terminates or is terminated other
than for Cause at any time on or after the second anniversary of the Grant Date
but prior to the third anniversary of the Grant Date, vesting of the Third
Tranche shall automatically accelerate and be deemed to have occurred
immediately prior to such termination; provided further that vesting of any
Additional Executive Equity Interests shall be in accordance with a schedule
comparable to that set forth above for the Executive Warrants.
(c) The strike price for the Executive Warrants shall be determined on the
Grant Date; provided, however, that (i) the First Tranche of Executive Warrants
shall have an exercise price which represents a recovery to the holders of
general unsecured claims under the Plan (any such recovery being a "Recovery";
such holders being the "Unsecured Creditors") of 40%, (ii) the Second Tranche of
Executive Warrants shall have an exercise price which represents a Recovery of
70% to the Unsecured Creditors, and (iii) the Third Tranche of Executive
Warrants shall have an exercise price which represents a Recovery of 90% to the
Unsecured Creditors; provided further that, notwithstanding the foregoing, if,
for any consecutive ten trading days during the five year term of the Executive
Warrants, the product of the average value per share of the Company's Common
Stock (if the Common Stock is listed on a national securities exchange including
NASDAQ, as calculated by multiplying the average per share closing price for
each of such ten trading days or, if not so listed or traded, as determined
pursuant to subsection (e) of this Section 2.2) times the number of outstanding
shares of such Common Stock (including shares reserved for issuance at prices
less than such average price but excluding any shares underlying Executive
Warrants issued pursuant to this Section 2.2) exceeds $200 million, then the
exercise price of the Executive Warrants covered by the First Tranche shall be
$0 per Executive Warrant.
(d) The Executive may at any time transfer the Executive Warrants and
Additional Executive Equity Interests in whole or in part only to his immediate
family members (subject to such transfer restrictions as may reasonably be
required for purposes of compliance with applicable law); provided, however,
that if at any time during the Employment Period the Company terminates the
Executive's employment hereunder other than pursuant to Section 3.1(c), or if at
any time the Executive terminates this Agreement pursuant to Section 3.2(b), the
transfer restrictions set forth above in this clause (d) prior to this proviso
shall no longer apply, except that any transfer shall be subject to such
transfer restrictions as may reasonably be required for purposes of compliance
with applicable law.
(e) For purposes of valuing (i) Common Stock pursuant to subsection (c) of
this Section 2.2 if such stock is not listed on a national securities exchange
(including NASDAQ) or (ii) the fair market value of the Executive Equity
Interest pursuant to subsection (b) of Section 4.2, such valuations shall be
determined by a nationally recognized investment banking firm mutually agreeable
to the parties and paid for by the Company, using such methodologies as such
firm shall determine to be appropriate. If the parties are unable to agree on
an investment banking firm, each of the Company and the Executive shall nominate
a nationally-recognized investment banking firm who shall then select a third
nationally-recognized investment banking firm to perform the valuation. The
Company and the Executive hereby agree that such firm's determination shall,
absent manifest error, be final and binding.
Section 2.3. Other Employee Benefits. During the Employment Period, the
Executive shall be eligible to participate in all employee benefit and welfare
plans and programs for which he meets the eligibility standards (including group
life insurance, medical and dental insurance, and accident and disability
insurance) and in which other senior executives of the Company are generally
eligible to participate. The Executive shall be entitled to paid vacations
during the Employment Period in accordance with the policies applicable
generally to senior executives of the Company.
Section 2.4. Expense Reimbursements. Subject to the limitations set forth
in Section 1.4, during the Employment Period, the Company shall promptly
reimburse the Executive for all reasonable business expenses incurred by him on
behalf of the Company in performing services hereunder upon the presentation of
records of such expenses, in accordance with the applicable policies and
procedures of the Company then in force.
ARTICLE III
TERMINATION OF EMPLOYMENT
Section 3.1. By the Company. The Company may terminate this
Agreement:
(a) immediately upon the death of the Executive;
(b) in the case of the Disability of the Executive if the Executive shall
not have returned to the performance of his duties within thirty (30) days after
written notice from the Board has been given to the Executive of the intention
to terminate due to Disability. For purposes of this Agreement, "Disability"
shall mean the inability of the Executive to perform his duties hereunder for a
continuous period of not less than three (3) consecutive months due to physical
or mental illness or injury.
(c) for "Cause" immediately upon giving the Executive written notice. For
purposes of this subsection, "Cause" shall mean:
(i) wilful misconduct by the Executive in the performance of his
duties to the Company resulting in material harm to the Company; or
(ii) commission by the Executive of an act of personal dishonesty or
breach of fiduciary duty which involves personal profit and relates to
the Company (other than a dispute relating to the erroneous reporting
of an amount as an expense); or
(iii) conviction of the Executive of (or the entry of a plea of nolo
contendre to) a felony; or
(iv) a material breach by the Executive of any provision of this
Agreement where such conduct continues or breach remains unremedied
for a period of
thirty (30) days after the receipt by the Executive personally of
specific written notice of such conduct or breach from the Board,
unless such breach is of a nature as cannot be cured within such
thirty (30) day period and the Executive makes good faith and diligent
efforts to cure such breach, in which case the period of cure will be
reasonably extended.
Section 3.2. By the Executive. The Executive may terminate this
Agreement:
(a) at any time upon sixty (60) days' Written Notice to the Board; or
(b) immediately for "Good Reason," which for purposes of this Agreement
shall be defined as:
(i) the assignment to the Executive of any duties inconsistent with
the Executive's status as the chief executive officer of the Company,
the removal of the Executive from any Board of Directors, or a
substantial adverse alteration in the nature of the Executive's
responsibilities from those in effect on the Commencement Date; or
(ii) the failure to elect such one additional member designated by
the Executive (the "Executive's Designee") to the Board at any time;
or
(iii) the removal of the Executive's Designee from the Board at any
time without the Executive's prior written consent; or
(iv) the reduction by the Company of the Executive's annual Base
Salary as in effect on the Commencement Date or as may be increased
from time to time; or
(v) relocation, without the Executive's consent (which consent
shall not be unreasonably withheld), of the headquarters outside
Dallas, Texas or such other place to which the Company may relocate
the Executive Office or requiring the Executive, without the
Executive's consent (which consent shall not be unreasonably
withheld), to be based anywhere other than Dallas, Texas or such
other place, except for travel as otherwise required by the terms
of this Agreement; or
(vi) failure by the Company to pay to the Executive any portion of
his compensation or Executive Equity Interest within thirty (30) days
when due; or
(vii) failure by the Company to provide the Executive with the
benefits at least comparable to those enjoyed by the Executive under
any of the pension, life insurance, medical, health and accident, or
disability plans in which the Executive was participating on the
Commencement Date or the taking of any action that would materially
impair or reduce such benefits; or
(viii) a material breach by the Company of any material provision
of this Agreement which continues for a period of thirty (30) days
after the receipt of written notice of such breach by the Company; or
(ix) the consummation of a Change in Control; or
(x) any purported termination of the Executive's employment that is
not in accordance with the termination provisions as provided in this
Agreement.
Section 3.3. Written Notice. Any termination by the Company or the
Executive pursuant to this Section 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 provisions of this Agreement relied upon.
Section 3.4. Severance. Except as otherwise provided in Sections 4.1
and 4.2, if at any time during the Employment Period the Company terminates the
Executive's employment other than pursuant to Section 3.1(c), or if at any time
the Executive terminates this Agreement for "Good Reason" pursuant to Section
3.2(b), the Executive shall be entitled to receive a severance payment, within
fifteen (15) days following the date of such termination, in a lump sum equal to
the greater of:
(a) the Base Salary in effect at the time of termination (in addition
to accrued but unpaid salary and/or bonus hereunder and, if applicable,
under the Old Agreement) for the balance of the Employment Period, and any
unreimbursed expenses under Section 2.4; or
(b) six (6) months Base Salary in effect at the time of termination
(in addition to accrued but unpaid salary and/or bonus hereunder and, if
applicable, under the Old Agreement), and any unreimbursed expenses under
Section 2.4;
provided, however, that upon any termination of the Executive's employment due
to the Company's liquidation prior to the consummation date of the Plan, such
lump sum shall be an amount equal to the Base Salary in effect at the time of
termination for one (1) year (plus accrued but unpaid salary and/or bonus
hereunder and, if applicable, under the Old Agreement).
Section 3.5. Arbitration; Administrative Claim.
(a) Arbitration. Any dispute or controversy arising under or in
connection with this Agreement, other than arising under Article V, which cannot
be resolved informally by the parties, including the arbitrability of the
dispute or controversy itself, shall be submitted to arbitration in New York
City and adjudicated by a panel of three arbitrators pursuant to the rules of
the American Arbitration Association then in effect. The decision of the
arbitrator shall be final and binding on the parties hereto, and judgment may be
entered on the
arbitrator's award in any court having jurisdiction thereof. Each party shall
be responsible for its own costs in the arbitration, provided, however, that the
arbitrator shall assess against the party that does not prevail, a reasonable
sum for attorney fees and expenses incurred by the prevailing party in
connection with the arbitration.
(b) Administrative Claim. All amounts due and not paid under this
Agreement shall be treated as and have the priority of an administrative claim
within the meaning of section 507 of the United States Code, 11 U.S.C. sections
101 et seq. (the "Bankruptcy Code"). The obligations of the Company under this
Agreement shall be unfunded. The Company shall not be required to segregate any
assets that may at any time be represented by benefits under this Agreement.
The Company shall not be deemed to be a trustee of any amounts to be paid under
this Agreement. Any liability of the Company to the Executive with respect to
any benefit shall be based solely upon any contractual obligations created
hereunder; no such obligation shall be deemed to be secured by any pledge or any
encumbrance or any property of the Company.
Section 3.6. Bankruptcy Court Approval. Subject to approval by the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court")
and waiver of certain covenants in its credit documents with its senior lenders,
the Company has full power and authority to enter into this Agreement. As
promptly as practical following the date hereof, the Company shall (i) file a
motion with the Bankruptcy Court seeking approval of the employment of the
Executive pursuant to the terms of this Agreement, and (ii) seek approval of the
Company's senior lenders, and shall use its reasonable best efforts to secure
such approvals. If the Executive's employment is not so approved within twenty
(20) days of the date of such filing (or such other date as the parties may
agree) this Agreement shall be null and void and the Old Agreement shall remain
in full force and effect.
ARTICLE IV
ADDITIONAL COMPENSATION
Section 4.1. Change in Control During Bankruptcy. In lieu of the benefits
and compensation otherwise applicable under Section 3.4, if prior to the
consummation date of the Plan a Change in Control (defined below) shall occur
and the Executive shall terminate his employment hereunder pursuant to Section
3.2(b)(x), the Executive shall be entitled to receive, within fifteen (15) days
following the date of such Change in Control, a payment in a lump sum equal to
the greater of:
(a) one and one half (1 1/2) times the Base Salary in effect at the
time of such Change in Control or
(b) 10% of the amount by which the Recovery to Unsecured Creditors
exceeds $60 million.
Section 4.2. Change in Control After Bankruptcy. In lieu of the
benefits and compensation otherwise applicable under Section 3.4 to a
termination under Section 3.2(b)(x), if within the first eighteen months after
the consummation date of the Plan a Change in Control shall occur and the
Executive shall terminate his employment hereunder pursuant to Section
3.2(b)(x), the Executive shall be entitled to receive, within fifteen (15) days
following the date of such Change in Control, a payment in a lump sum equal to
the sum of:
(a) two times the Base Salary then in effect at the time of such
Change in Control; plus
(b) an amount (which if negative shall be zero) equal to (i) 10% of
the amount by which the Recovery to Unsecured Creditors exceeds $60
million less (ii) the then fair market value of the Executive Equity
Interest (as calculated in accordance with subsection (e) of Section
2.2).
Section 4.3. Change in Control Definition. For purposes of this
Agreement, "Change in Control" shall mean the consummation of the first
transaction or group of transactions (including, without limitation, any merger
or consolidation) on or after the date hereof, the result of which is that any
person or entity, or group of persons or entities, (i) if prior to the
consummation date of the Plan, other than the unsecured creditors of the Company
on the date hereof becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of 51% or more of the aggregate claims of all
such unsecured creditors as of the date hereof, or (ii) if on or after the
consummation date of the Plan (and except as provided by the Plan), becomes the
"beneficial owner" (as so defined), directly or indirectly, of 51% or more of,
the aggregate number of shares of Common Stock and securities of the Company
convertible into or exercisable for Common Stock.
ARTICLE V
NON-COMPETITION; CONFIDENTIAL INFORMATION
Section 5.1. Non-Competition. Subject to Section 5.3, (x) at any time
during the Employment Period, and (y) if the Executive's employment hereunder is
terminated by the Company for Cause or otherwise or is terminated voluntarily by
the Executive other than for Good Reason, for a period of one year following the
date of termination of the Executive's employment hereunder (or, if less, for
such lesser period ending on the fifth anniversary of the Commencement Date),
the Executive:
(a) shall not engage in any activities, whether as employer, proprietor,
partner, stockholder (other than as the holder of less than 5% of the stock of a
corporation, the securities of which are traded on a national securities
exchange or in the over-the-counter market), director, officer, employee,
advisor or otherwise, in the business of operating specialty retail stores
selling jeans and jeans-related casual apparel and accessories as a
substantial part of their merchandise assortment, in competition with the
Company or any of its subsidiaries with net sales in excess of $10,000,000 for
the most then recently completed fiscal year (a "Competing Business"); and
(b) shall not take any action which is calculated to induce or attempt to
persuade any employee of the Company (except for Xxxxx Xxxxxx), or any of its
subsidiaries, to terminate his or her employment relationship with the Company;
provided, however, the Executive's continued service as Chairman of the Board
and/or majority (or significant) stockholder of Xxxxxx Enterprises, Inc. shall
not be considered engaging in a Competing Business for purposes of this Section
5.1 (provided that the Executive complies with Section 1.3).
Section 5.2. Confidential Information. Subject to Section 5.3, the
Executive shall not, at any time during the Employment Period or thereafter,
divulge any trade secrets or other confidential information of the Company or
any of its subsidiaries, except to the extent that (through no action by the
Executive) such information becomes a matter of public record or is published in
a newspaper, magazine or other periodical available to the general public (other
than as a result of a breach of this Agreement), or as the Board may so
authorize in writing. When the Executive shall cease to be employed by the
Company, the Executive shall surrender to the Company all records and other
documents obtained by him or entrusted to him during and in the course of his
employment hereunder (together with all copies thereof); provided, however, that
the Executive may retain copies of such documents as necessary for the
Executive's personal records for tax purposes.
Section 5.3. Scope of Covenants; Remedies. The following provisions shall
apply to the covenants of the Executive contained in Sections 5.1 and 5.2:
(a) the covenants contained in subsections (a) and (b) of Section 5.1
shall apply within all the territories in which the Company or any of its
subsidiaries are actively engaged in the conduct of any of the phases of the
Company's business including, without limitation, production, promotional and
marketing activities, purchases, sales and distribution during the Employment
Period;
(b) without limiting the right of the Company to pursue all other legal
and equitable remedies available for violation by the Executive of the covenants
contained in Sections 5.1 and 5.2, it is expressly agreed by the Executive and
the Company that such other remedies cannot fully compensate the Company for any
such violation or any continuing violation and that the Company shall be
entitled to injunctive relief to prevent any such violation thereof;
notwithstanding the foregoing, under no circumstances will the Executive be
forced to forfeit his equity interest in the Company as a remedy for violating
the covenants contained in Section 5.1.
(c) each party intends and agrees that if in any action before any courts
or agency legally empowered to enforce the covenants contained in Section 5.1
and 5.2, any term,
restriction, covenant or promise contained herein is found to be unreasonable
and accordingly unenforceable, then such term, restriction, covenant or promise
shall be deemed modified only to the extent necessary to make it enforceable by
such court or agency; and
(d) except as otherwise specifically provided herein, the covenants
contained in 5.2 shall survive the conclusion of the Executive's employment
hereunder.
Section 5.4. Purchase of Equity Interest. In the event all or
substantially all of either the Company's stock or the Company's assets are
auctioned for sale, nothing herein shall prohibit the Executive or his designee,
upon disclosure to the Board, the Creditors' Committee, and the Company's senior
lenders, from participating as a potential buyer in such auction, provided that
the Executive complies with any appropriate safeguards adopted by and
implemented at the instructions of the Board in advance to avoid any conflict of
interest.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Key Man Life Insurance. The Company and the Executive
acknowledge that from time to time the Company may procure on the life of the
Executive key man insurance with the Company as the sole beneficiary thereof.
In the event that the Company intends at any time to procure insurance policies
on the life of the Executive, the Executive agrees to cooperate in the obtaining
of such life insurance, including, but not limited to, executing such insurance
applications and submitting to such medical examinations as may be reasonably
required.
Section 6.2. Attorneys Fees. All attorney fees and expenses incurred by
the Executive pertaining to this Agreement shall be paid by the Company.
Section 6.3. Indemnification, Defend and Hold Harmless Clause.
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the Executive entering
into and performing this Agreement or by reason of the fact that the Executive
is or was a director, officer or executive of the Company or its affiliates or
is or was serving at the request of the Company or its affiliates as a director,
officer, member, executive or agent of another corporation, partnership, joint
venture, trust or other enterprise (a "Proceeding"), the Executive shall be
indemnified and held harmless by the Company, to the fullest extent permitted or
authorized by law, against all cost, expense, liability and loss (including,
without limitation, attorney's fees and expenses, judgments, fines, penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
the Executive in connection therewith, and such indemnification shall continue
as to the Executive even if he has ceased to be a director, member, executive or
agent of the Company or its affiliates or other entity and shall inure to the
benefit of the Executive's heirs, executors and administrators; provided,
however, that the foregoing indemnification shall not apply to
any cost, expense, liability or loss to the extent that there has been a final
and binding judicial determination before a court of competent jurisdiction that
such cost, expense, liability or loss resulted from the Executive's gross
negligence or willful misconduct.
(b) The Company shall pay to the Executive all reasonable costs and
expenses actually incurred by Executive in connection with a Proceeding within
thirty (30) days after receipt by the Company of a written request for such
payment, together with reasonable supporting documentation required by the
Company and an undertaking by the Executive to repay the amount of such payment
if it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses.
(c) As used herein, the term "affiliate" shall mean any corporation or
other business entity controlling, controlled by or under common control with
the Company; provided, however, that in no event shall the term "affiliate" as
used herein include Xxxxxx Enterprises, Inc. or any of its subsidiaries. The
provisions of this Section 6.3 shall survive the termination of this Agreement.
Section 6.4. Notices. Any notice, demand, request or other communication
required or permitted under this Agreement shall be deemed to have been
effectively made or given if in writing, and delivered by hand, mailed by
registered or certified mail, postage prepaid, return receipt requested, or sent
by reputable overnight courier service, properly addressed as follows:
If to the Executive at: 000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxx Xxxxxx
With a copy to: Xxxxx & Xxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Xxxxxx X. Xxxxxx, Esq.
If to the Company at: County Seat, Inc.
County Seat Stores, Inc.
0000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Chairman of the Board
With a copy to: County Seat Stores, Inc.
0000 Xxxx Xxxx Xxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000-0000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.,
Senior Vice President & General Counsel
or to such other address as furnished by a party in writing pursuant to this
Section 6.4. The telecopier numbers set forth above are for convenience only
and the delivery of any notice, demand, request or other communication by
telecopy or facsimile shall not be sufficient for purposes of giving notice
hereunder.
Section 6.5. Assignment and Succession. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and be binding upon
its successors and assigns, and the Executive's rights and obligations hereunder
shall inure to the benefit of and be binding upon his legal representatives.
The Executive's obligations hereunder shall not be assignable by the Executive.
Section 6.6. Old Agreement. Upon the approval of this Agreement by the
Bankruptcy Court, this Agreement shall supersede in its entirety the Old
Agreement; provided, however, that notwithstanding anything to the contrary
contained herein, the Executive shall be entitled to receive promptly all
compensation earned and or accrued and all expense reimbursements to which the
Executive may be entitled under the Old Agreement through the time of such
approval in accordance with the terms thereof as though such Old Agreement had
not been superseded as provided for herein.
Section 6.7. Headings. The Article, Section, subsection and paragraph
headings are for convenience of reference only and shall not define or limit the
provisions hereof.
Section 6.8. Entire Agreement. This instrument contains the entire
agreement between the parties as to the subject matter hereof. All prior
employment understandings and agreements regarding compensation or bonus
compensation, other terms of employment and negotiations and agreements with
respect thereto are merged herein and are deemed cancelled. Any amendment or
modification hereto must be in writing and signed by all parties hereto.
Section 6.9. Severability. The invalidity, illegality, or
unenforceability of any provision hereof shall not in any way affect, impair,
invalidate or render unenforceable this Agreement or any other provision hereof.
Section 6.10. Taxes. The Company shall be entitled to deduct or withhold
all applicable payroll and social security taxes where required on all
applicable compensation paid to the Executive or any successor in interest.
Section 6.11. Applicable Law. This Agreement shall at all times be
governed by and construed, interpreted and enforced in accordance with laws of
the State of New York.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officer and the Executive has signed this Agreement as of
the day and year first above written.
COUNTY SEAT STORES, INC.
-------------------------- By:
Xxx Xxxxxx ---------------------------------------
Its: Senior Vice President
and General Counsel
CSS TRADE NAMES, INC.
By:
---------------------------------------
Its: Senior Vice President
and General Counsel
Acknowledged and Agreed as of
this ____ day of August, 1997:
COUNTY SEAT, INC.
By:
---------------------------------------
Its: Senior Vice President
and General Counsel
