EXHIBIT 10.24
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 1, 1998, by and between Candie's
Inc., a Delaware corporation with an address at 0000 Xxxxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx (the "Company"), and Xxxxx Xxxxxx, an individual residing at
00 Xxxxxxxx Xxxx, Xxxxxxxx, XX 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the parties desire to enter into this agreement to reflect their
mutual agreements with respect to the employment of the Executive by the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereby mutually agree as
follows:
Section 1. Employment. The Company hereby employs Executive, and the
Executive hereby accepts such employment, as the Company's Senior Vice
President and Chief Financial Officer, pursuant to the terms and conditions
set forth in this Agreement.
Section 2. Duties. The Executive shall serve as the Company's Senior
Vice President and Chief Financial Officer and shall be responsible for and
perform all tasks, activities and duties normally inherent in such capacity
and which are customary for such position, including without limitation,
(i) assisting in the day-to-day business operations of the Company and such
executive and administrative duties as may be reasonably assigned by the
Chief Executive Officer or the Chief Operating Officer in furtherance of
the Company's business, (ii) the hiring, supervising and terminating of
personnel involved in the finance department of the Company, (iii)
communicating with the investors and the financial community, (iv) managing
the financial activities of the Company, and (v) overseeing the Company's
independent auditors. Throughout the Term (as hereinafter defined),the
Executive shall devote his best efforts and full business time to the
business and affairs of the Company and its affiliates; provided however,
that the Executive may serve on certain advisory boards and boards of
directors of charitable organizations in the sole discretion of the Chief
Executive Officer of the Company. The Executive shall report directly to
the Chief Executive Officer of the Company and receive direction and
supervision from the Chief Operating Officer.
Section 3. Term of Employment; Vacation.
3.1 Term. The initial term of the Executive's employment shall be for
a period of two years commencing March 1, 1998 ( the "Start Date" and
"Anniversary Date") and, continue, unless earlier terminated by either
party in accordance with the terms herewith (such term of employment is
referred to hereinafter as the "Term"). Upon expiration of the initial
Term, this Agreement shall be automatically renewed for successive renewal
terms of two years at compensation levels and conditions mutually
acceptable to the parties, unless not less than 120 days prior to the
expiration of the initial or any renewal Term either the Company or the
Executive notifies the other of its or his election not to renew this
Agreement. In the event that the Company elects not to renew this
Agreement, the Company shall pay Executive, as severance, for two (2)
months of Base Salary following the end of the Term.
3.2 Vacation. The Executive shall be entitled to four (4) weeks paid
vacation during each year falling within the Term. Vacations shall be taken
at such times as the Executive and the Company determine is consistent with
the proper performance of his duties and responsibilities hereunder. For
purposes hereof, the term "year" shall mean each twelve month period
commencing on the Start Date.
Section 4. Compensation of Executive.
4.1 Salary. The Company shall remunerate the Executive at an annual
base salary (the "base salary") of Two Hundred Twenty Five Thousand Dollars
($225,000) during the first year of the initial Term. The Base Salary shall
be increased to Two Hundred Fifty Thousand Dollars ($250,000) on the first
Anniversary Date. Any further increase shall be in the sole discretion of
the Chief Executive Officer and/or the Compensation Committee of the Board
of Directors (the "Compensation Committee"). All salaries payable to
Executive shall be paid at such regular weekly, biweekly or semi-monthly
time or times as the Company makes payment of its regular payroll in the
regular course of business.
4.2 Bonuses; Options.
(a) Each year during the Term, the Company shall pay to the Executive
a bonus (the "Bonus") of not less than 1/2% (.5%) of the Company's annual
pre-tax income, as
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reported by the Company in filings made with the Securities and Exchange
Commission or, if the Company is no longer subject to the reporting
requirements of the Federal Securities Laws, as would have been required by
the Securities and Exchange Commission. The Bonus shall be payable within
120 days from the end of the Company's fiscal year. Additional Bonuses, if
any, may be determined by the Compensation Committee based upon established
targets for financial and qualitative performance criteria established by
it. The Bonus shall be pro rated during any period where the Executive has
not worked for the Company for the entire fiscal year to which the Bonus
relates. The Compensation Committee may determine that such Additional
Bonuses, if any, be paid in cash or options, or any combination thereof.
(b) Upon the execution of this Agreement, the Executive shall receive
stock options (the "Options") exercisable for 125,000 shares of the
Company's common stock, per .001 per share, exercisable for a period of
five (5) years at the closing sales price on February 5, 1998 (i.e., $ ).
The Options shall vest and first become exercisable as follows; 25,000
shares on the Start Date, 50,000 shares on the first Anniversary Date and
25,000 shares on each of the second and third Anniversary Dates. The
Options shall be subject to the approval of the Board of Directors of the
Company. The Options will be substantially in the form of Exhibit A
attached hereto and the shares of Common Stock issuable upon the exercise
thereof shall be reserved for issuance pursuant to the Company's 1989 Stock
Option Plan, as amended. To the extent the options are available under the
Company's 1997 Stock Option Plan, the Options shall be issued under such
plan.
(c) The Company shall lease a car for the Executive for his exclusive
use provided, however, that the monthly lease payments shall not exceed
$700 per month. In addition, the Company shall reimburse the Executive for
all, maintenance, repairs, insurance, gas and tolls, and other reasonable
upkeep and related expenses on such car. The Company shall reimburse the
Executive for all such expenses promptly after presentation by the
Executive, from time to time, of an itemized and documented accounting of
such expenditures.
4.3 Expenses. During the Term, the Company shall promptly reimburse
the
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Executive for all reasonable and necessary travel expenses and other
disbursements for promoting the business of the Company and those incurred
by the Executive in the performance of the Executive's duties hereunder.
4.4 Benefits. The Executive shall be permitted during the Term
(without the imposition of any waiting periods but only to the extent that
the Company can cause such waiting periods to be waived) to participate in
any and all benefit plans, hospitalization, major medical or disability
insurance plans, health or other insurance programs, pension and 401K
plans, bonus plans or similar benefits that may be available or in effect
from time to time during the Term hereof for the benefit of its executive
officers on the same terms and conditions as other senior executives of the
Company (including coverage under any officers and directors liability
insurance policy), subject to such eligibility rules as are applied to
senior executives generally. The various employee benefits specified herein
shall be extended also to the member of the Executives immediate family in
the same manner as the member of the immediate families of other employees
of the Company are extended such benefits. In addition, the Company shall
reimburse the Executive for expenses incurred in connection with a platinum
health sports club membership at the Doral Arrowwood in an amount not to
exceed $2,000 per annum.
Section 5. Disability of the Executive.
5.1 During the Term, the Executive shall receive a disability
insurance policy comparable to that of the other senior executives of the
Company.
5.2 If the Executive is disabled or unable to perform his duties by
reason of disability, illness or other incapacity for a period of more than
one hundred eighty (180) consecutive days, or more than one hundred eighty
(180) days, whether or not consecutive, in any 365 day period, the Company,
at its option, may terminate this Agreement at once upon 30 days prior
notice to the Executive. The terms "disability" and "illness" or other
"incapacity" shall mean the inability of the Executive to engage in the
performance of his duties as provided in Section 2 hereof of this
Agreement. Any question regarding the Executive's "disability" and
"illness" or other "incapacity" shall be finally determined by a physician
jointly selected by the Company and the Executive.
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Section 6. Death of the Executive. During the Term, Executive shall
receive, at the Company's expense, a life insurance policy in amount equal
to his Base Salary. The amount of such policy shall be adjusted in
accordance with any changes in the Base Salary. Executive shall cooperate
in the Company's efforts to obtain such a policy including submission to a
physical examination.
Section 7. Termination. If the Executive's employment is terminated by
the Company during the Employment Term of this Agreement, except in
connection with the termination of the Executive for Cause, as defined in
Section 1(a), the Executive will have the option to voluntarily resign from
the employ of the Company and publicly announce such resignation, if
Executive so desires. The Company and its current or future management will
support such resignation in any disclosures to third parties or inquiries
from third parties.
7.1 Cause. The Company may terminate the employment of the Executive
and all of the Company's obligations under this Agreement at any time for
Cause (as hereinafter defined) by giving the Executive prior notice of such
termination, with reasonable specificity of the details thereof. As use
herein, the term "Cause" shall be limited to and mean (a) an action by the
Executive involving willful malfeasance having a material adverse effect on
the Company, (b) the failure to act by Executive involving material
nonfeasance having a material adverse effect on the Company, or (c) the
Executive being convicted of a felony, or of any economic, business or
commercial crime; provided, however, that any action or failure to act by
Executive shall not be constitute "Cause" if, in good faith, Executive
reasonably believed such action or failure to act to be in or not opposed
to the best interests of the Company or was pursuant to the instructions,
directions or with the consent of either the Chief Executive Officer or
Chief Operating Officer, or the Executive believes in good faith that the
action or failure to act would be inconsistent with law, professional
ethics, accepted or accredited standards or business behavior. A
termination pursuant to Section 7.1(a), or (b), (other than as a result of
a conviction) shall take effect 15 days after the giving of the notice
contemplated hereby unless the Executive shall, during such 15 day period,
remedy to the reasonable satisfaction of the Chief Executive Officer and/or
the Board of Directors of the Company the breach specified in such notice;
provided,
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however, that such termination shall take effect immediately upon the
giving of such prior notice if the Chief Executive Officer and/or Board of
Directors of the Company shall, in its reasonable discretion, have
determined that such breach is not remediable (which determination shall be
stated in such notice). A termination pursuant to Section 7.1(c) (as a
result of a conviction of a crime) shall take effect immediately upon the
giving of the notice contemplated hereby. For purposes of this Agreement, a
"Notice of Termination" shall mean delivery of notice specifying
particulars thereof in detail. For purposes of this Agreement, no such
purported termination of Executive's employment shall be effective without
such Notice of Termination.
7.2 Without Cause. The Company may terminate the employment of the
Executive and all of the Company's obligations under this Agreement (except
as hereinafter provided) at any time during the Term without Cause by
giving the Executive written notice of such termination, to be effective 30
days following the giving of such written notice. For convenience of
reference, the date upon which any termination of the employment of the
Executive pursuant to Sections 5, 6 or 7 shall be effective shall be
hereinafter referred to as the "Termination Date".
7.3 Termination For Good Reason. Executive may terminate his
employment hereunder for Good Reason at any time during the Employment
Term, in which event Executive shall resign from all of his positions with
Company. For purposes of this Agreement, "Good Reason" shall mean any of
the following (without the Executive's express prior consent ):
(a) The assignment to Executive by the Company of duties
inconsistent with Executive's position as Senior Vice President and
Chief Financial Officer of the Company, or any reduction or
significant change in either the position, stature, job function,
(including the person to whom you shall report), except in connection
with the termination of Executives employment for Cause;
(b) A reduction by the Company in the initial Base Salary and/or
benefits as defined in Section 4 in effect on the Start Date or the
Company's failure to increase the Executive's salary on the first
anniversary date pursuant to Section 4;
(c) A failure by the Company to discharge its obligations under
any bonus
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arrangement described in Section 4.2 (a) or (b) hereof; or
(d) an event having a substantial change in the nature of the
business of the Company or its affiliates or the way in which such
business is presently conducted. A termination pursuant to this
Section 7.3 shall take effect 15 days after the giving of the notice
contemplated hereby unless the Company shall, during such 15 day
period, remedy to the reasonable satisfaction of the Executive the
breach specified in such notice; provided, however, that such
termination shall take effect immediately upon the giving of such
notice if the Executive, in his reasonable discretion, shall have
determined that such breach is not remediable (which determination
shall be stated in such notice).
7.4 Change of Control. If a Change of Control (as hereinafter defined)
occurs, the Executive shall have the right to terminate this Agreement upon
180 days prior notice to the Company; provided, however, the Company shall
have the option to shorten such period. At least ten (10) days prior to any
such proposed Change of Control, the Company shall notify the Executive of
its intention to effect such Change of Control, and the Executive shall
thereupon have thirty (30) days from the actual receipt of such notice to
give notice of his intention to terminate this Agreement. As used herein,
the term "Change of Control" shall mean: (i) when any "person" as defined
in Section 3(a)(9) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), and as used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) of the Exchange Act, but
excluding the Company or any subsidiary or any affiliate of the Company or
any employee benefit plan sponsored or maintained by the Company or any
subsidiary of the Company (including any trustee of such plan acting as
trustee), becomes the "beneficial owner" (as defined in Rule 13(d)(3) under
the Exchange Act) of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities; or
(ii) when, during any period of twelve (12) consecutive months, the
individuals who, at the beginning of such period, constitute the Board of
Directors (the "Incumbent Directors") cease for any reason other than death
to constitute at least a majority thereof; provided, however, that a
director who was not a director at the beginning of such 12 month period
shall be deemed to have satisfied such 12 month requirement (and be an
Incumbent Director) if such director was elected by, or on
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the recommendation of or with the approval of, at least two thirds of the
directors who then qualified as Incumbent Directors either actually
(because they were directors at the beginning of such 12 month period) or
through the operation of this proviso; or (iii) the occurrence of a
transaction requiring stockholder approval for the acquisition of the
Company by an entity other than the Company or a subsidiary or an
affiliated company of the Company through purchase of assets, or by merger,
or otherwise; provided, however, in the event a Change of Control occurs
and neither Xxxx Xxxx nor Xxxxxxxx X'Xxxxxxxxxxx remains with the Company
or its successor in a substantial decision making capacity for twelve
months (12) subsequent to any event described above; then the Executive may
terminate the Agreement within thirty (30) days after such period and
receive the payments described in Section 8.5(a)(iv).
Section 8. Effect of Termination of Employment.
8.1 Disability or Death. Upon the termination of the Executive's
employment for disability or death, neither the Executive nor the
Executive's beneficiaries or estate shall have any further right to
compensation under this Agreement or any claims against the Company arising
out of this Agreement except as provided in Sections 5 or 6 and the right
to receive (i) the unpaid portion of the Base Salary provided for in
Section 4.1, earned through the Termination Date and the share of the Bonus
and other benefits for such year pro-rated for that portion of the year up
to the Termination Date (the "Unpaid Salary Amount") (ii) reimbursement for
any expenses for which the Executive shall not have theretofore been
reimbursed as provided in Section 4.3 (the "Expense Reimbursement Amount"),
and (iii) payment for any vacation days accrued but not taken (the "Accrued
Vacation Amount") and (iv) all unvested Options shall vest as of the
Termination Date.
8.2 Cause. Upon the termination of the Executive's employment for
Cause, the Executive shall be entitled to the right to receive (i) the
Unpaid Salary Amount, (ii) the Expense Reimbursement Amount, and (iii) the
Accrued Vacation Amount.
8.3 Without Cause or For Good Reason. Upon the termination of the
Executive's employment for other than Cause, Disability or Death, neither
the Executive nor the Executive's
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beneficiaries or estate shall have any further rights to compensation under
this Agreement or any claims against the Company arising out of this
Agreement, except the Executive shall have the right to receive (i) the
Unpaid Salary Amount, (ii) the Expense Reimbursement Amount, (iii) the
Accrued Vacation Amount, and (iv) severance compensation (based upon the
then existing compensation level) equal to the Base Salary for the
(including medical benefits) unexpired portion of the Term but in no event
less than 6 months, payable in equal monthly installments during the period
commencing thirty (30) days following the Termination Date and continuing
until paid. In addition, (i) thirty 30 days following the Termination Date,
the Company shall pay to the Executive the Bonus for the current fiscal
year pro-rated through the Termination Date (the "Pro Rated Bonus Amount"),
in accordance with Section 4.2 and (ii) all unvested Options shall vest as
of the Termination Date.
8.4 Mitigation. Any severance amount payable under the Agreement shall
be reduced by the amount of any compensation earned from comparable
employment during the term of the Agreement. The Executive shall use his
best efforts to secure comparable employment.
8.5 Change of Control.
(a) In the event that a Change of Control occurs and the Executive
elects to terminate this Agreement, the Executive shall be entitled to
receive in cash, within ten (10) days of termination of this Agreement, (i)
the Expense Reimbursement Amount, (ii) the Unpaid Salary Amount, (iii) the
Accrued Vacation Amount, (iv) an amount equal to the twelve months of
Executive's Base Salary, and (v) all unvested Options shall vest as of the
Termination Date.
(b) In the event that any payment (or portion thereof) to Executive
under this Section 8.5 is determined to constitute an "excess parachute
payment," under Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended, the following calculations shall be made:
(i) the after-tax value to Executive of the payments under this
Section 8.5 without any reduction; and
(ii) the after-tax value to Executive of the payments under this
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Section 8.5 as reduced to the maximum amount (the "Maximum Amount")
which may be paid to Executive without any portion of the payments
constituting an "excess parachute payment".
If, after applying the agreed upon calculations set forth above, it is
determined that the after-tax value to the Executive determined under
clause (ii) above is greater that the after-tax value determined under
clause (i) above, the payments to Executive under this Section 8 shall be
reduced to the Maximum Amount.
Section 9. Disclosure of Confidential Information. Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited
to its customer list, products, know-how, and business plans. Executive
acknowledges that such information is of great value to the Company, is the
sole property of the Company, and has been and will be acquired by him in
confidence. In consideration of the obligations undertaken by the Company
herein, Executive will not, at any time, during or after his employment
hereunder, reveal, divulge or make known to any person, any information
acquired by Executive during the course of his employment, which is treated
as confidential by the Company and not otherwise in the public domain,
other than in the ordinary course of business during his employment
hereunder. The Executive shall not be deemed to have breached this Section
9 if the Executive shall be specifically compelled by lawful order of any
judicial, legislative, or administrative authority or body to disclose any
confidential material or else face civil or criminal penalty or sanction.
The provisions of this Section 9 shall survive Executive's employment
hereunder.
Section 10. Covenant Not To Compete.
10.1 Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary. The parties confirm that
it is reasonably necessary for the protection of Company that Executive
shall not, directly or indirectly, at any time during the term of the
Agreement and the "Restricted Period" (as defined in Section 10.4 below).
(a) employ or engage, or cause or authorize, directly or
indirectly, to be employed or engaged, for or on behalf of himself or
any third party, any employee or agent of Company
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or any affiliate thereof.
(b) for or on behalf of himself or any third party, at any time
during the Term and during the Restricted Period solicit any customers
of the Company or any affiliate thereof in a manner which directly or
indirectly competes with the business the Company is engaged in at the
Termination Date.
10.2 If any of the restrictions contained in this Section 10 shall be
deemed to be unenforceable by reason of the extent, duration or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form
this Section shall then be enforceable in the manner contemplated hereby.
10.3 The term "Restricted Period," as used in this Section 10, shall
mean the period of Executive's actual employment hereunder plus in the
event the Executive's employment is terminated with Cause for a period of
twelve (12) months thereafter.
10.4 The provisions of this Section 10 shall survive the end of the
Term as provided in Section 10.3 hereof.
Section 11. Miscellaneous.
11.1 Injunctive Relief. Executive acknowledges that the services to be
rendered under the provisions of this Agreement are of a special. unique
and extraordinary character and that it would be difficult or impossible to
replace such services. Accordingly, any breach or threatened breach by
Executive of this Agreement shall entitle the Company, in addition to all
other legal remedies available to it, to apply to any court of competent
jurisdiction to seek to enjoin such breach or threatened breach. The
parties understand and intend that each restriction agreed to by Executive
herein above shall be construed as separable and divisible from every other
restriction, that the unenforceability of any restriction shall not limit
the enforceability, in whole or in part, of any other restriction, and that
one or more or all of such restrictions may be enforced in whole or in part
as the circumstances warrant. In the event that any restriction in this
Agreement
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is more restrictive than permitted by law in the jurisdiction in which
Company seeks enforcement thereof, such restriction shall be limited to the
extent permitted by law.
11.2 Assignments. Except as provided in Section 7.4, neither the
Executive nor the Company may assign, hypothecate or delegate any of their
rights or duties under this Agreement without the express written consent
of the other party.
11.3 Entire Agreement. This Agreement constitutes and embodies the
full and complete understanding and agreement of the parties with respect
to Executive's employment by Company, supersedes all prior understandings
and agreements, whether oral or written, between Executive and Company, and
shall not be amended, modified or changed except by an instrument in
writing executed by the party to be charged. The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate
any other provision of this Agreement. No waiver by either party of any
provision or condition to be performed shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
11.4 Binding Effect. This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.
11.5 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.
11.6 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall
be deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or
by private overnight mail service (e.g. Federal Express) to the party at
the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof. Notices
shall be deemed given on the sooner of the date actually received or the
third business day after sending.
11.7 Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York without giving effect
to such State's conflicts of laws provisions and each of the parties hereto
irrevocably consents to the jurisdiction and venue of the Federal and State
courts located in the State of New York, County of New York.
11.8 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one of the same instrument.
11.9 Separability; Legal Fees. If any of the restrictions contained in
this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then the court making
such determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form
this Agreement shall then be enforceable in the manner contemplated hereby.
If any provision of the Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability
shall not effect the remaining provisions hereof which shall remain in full
force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
an officer thereunto duly authorized and the Executive has hereunto set his hand
of the date set forth above.
CANDIE'S INC.
By: /s/ Xxxxx X'Xxxxxxxxxxx
---------------------------------
Name: Xxxxx X'Xxxxxxxxxxx
Title: Exec. VP, COO
/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
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