Exhibit 10.27
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of March 31, 2000,
between DESIGNS, INC., a Delaware corporation with an office at 00 X Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx, 00000 (the "Company"), and Xxxxx X. Xxxxx, residing at
000 Xxxxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires that Executive be employed to serve in a
senior executive capacity with the Company, and Executive desires to be so
employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual promises,
representations and covenants herein contained, the parties hereto agree as
follows:
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby accepts
such employment, subject to the terms and condition herein set forth. Executive
shall hold the office of President and Chief Executive Officer reporting to the
Board of Directors of the Company (the "Board of Directors").
2. TERM
The initial term of employment under this Agreement shall begin on
April 10, 2000 (the "Employment Date") and shall continue for a period of two
(2) years from that date, subject to prior termination in accordance with the
terms hereof. However, by written notice to Executive on or prior to the first
anniversary of the Employment Date, the Company has the option to extend the
initial term of employment under this Agreement for an additional one year,
until the third anniversary of the Employment Date. Thereafter, this Agreement
shall automatically be renewed for successive one-year terms on each anniversary
of the Employment Date unless either party shall give the other at least ninety
(90) days written notice prior to such anniversary date that it will not renew
this Agreement.
3. COMPENSATION
(a) As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer and director if
requested, of the Company and any of its subsidiaries and affiliates, the
Company agrees to pay to Executive, and Executive agrees
to accept, payable in equal installments in accordance with Company practice, an
annual base salary of $375,000.
(b) In addition to the annual base salary, Executive will be
entitled to receive an annual bonus of up to fifty percent (50%) of his annual
base salary (the "Discretionary Bonus Amount") depending on the performance of
the Company. The Compensation Committee of the Board of Directors shall
determine, in its sole discretion, the amount of the bonus to be paid to
Executive. However, if the Company meets its annual projections for its fiscal
budget plan, as approved by the Board of Directors, the Company shall pay
Executive shall receive a bonus from the Discretionary Bonus amount equal to ten
percent (10%) of his annual base salary.
4. OPTIONS
(a) The Company shall grant to the Executive 75,000 options under
the Company's 1992 Stock Incentive Plan and an additional 225,000 non-qualified
options which are exercisable at a purchase price per share equal to the closing
price of the Common Stock on March 30, 2000. The options will vest pro rata over
a three (3) years period commencing on the Employment Date, with one third of
the total vesting and becoming exercisable on each of the first, second and
third anniversaries of the Employment Date. If on the first anniversary date of
the Employment Date, the Company does not extend the Agreement for an additional
year as discussed in paragraph (2) hereof, the 300,000 options will vest pro
rata over a two (2) year period commencing on the Employment Date, with one half
of the total vesting and becoming exercisable on each of the first and second
anniversaries of the Employment Date. If this Agreement is terminated, then all
options which are not fully vested will be forfeited immediately. The Company
will register at its expense, when any of the 225,000 shares subject to
non-qualified options become vested and exercisable by Executive.
(b) The Executive's options will vest immediately if there is a
"change in control" as defined in the Company's 1992 Stock Incentive Plan.
5. EXPENSES
The Company shall pay or reimburse Executive, in accordance with the
Company's policies and procedures and upon presentment of suitable vouchers, for
all reasonable business and travel expenses which may be incurred or paid by
Executive in connection with his employment hereunder. Executive shall comply
with such restrictions and shall keep such records as the Company may deem
necessary to meet the requirements of the Internal Revenue Code of 1986, as
amended from time to time, and regulations promulgated thereunder.
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6. OTHER BENEFITS
(a) Executive shall be entitled to such vacations and to participate
in and receive any other benefits customarily provided by the Company to its
senior management personnel (including any profit sharing, pension, 401(k),
short and long-term disability insurance, hospital, major medical insurance and
group life insurance plans in accordance with the terms of such plans), all as
determined from time to time by the Compensation Committee of the Board of
Directors.
(b) The Company shall, during the term of Executive's employment
hereunder, provide Executive with an automobile allowance in the amount of
$600.00 per month.
7. DUTIES
(a) Executive shall perform such duties and functions as the Board
of Directors of the Company shall from time to time determine and Executive
shall comply in the performance of his duties with the policies of, and be
subject to the direction of, the Board of Directors. Executive shall serve as an
officer of the Company without further compensation.
(b) At the request of the Board of Directors, Executive shall serve,
without further compensation, as an executive officer and/or director of any
subsidiary or affiliate of the Company and, in the performance of such duties,
Executive shall comply with the directives and policies of the Board of
Directors of each such subsidiary or affiliate.
(c) The Company shall use its best efforts to cause Executive to be
appointed to the Board of Directors of the Company and the next Annual Meeting
of Stockholders and Executive shall serve as a Director without further
compensation.
(d) During the term of this Agreement, Executive shall devote
substantially all of his time and attention, vacation time and absences for
sickness excepted, to the business of the Company, as necessary to fulfill his
duties. Executive shall perform the duties assigned to him with fidelity and to
the best of his ability. Notwithstanding anything herein to the contrary,
subject to the foregoing, Executive may engage in other activities so long as
such activities do not unreasonably interfere with Executive's performance of
his duties hereunder and do not violate Section 10 hereof.
(e) Nothing in this Section 7 or elsewhere in this Agreement shall
be construed to prevent Executive from investing or trading in nonconflicting
investments as he sees fit for his own account, including real estate, stocks,
bonds, securities, commodities or other forms of investments, provided such
activities do not unreasonably interfere with Executive's performance of his
duties hereunder.
(f) The principal location at which the Executive shall perform his
duties hereunder shall be at the Company's offices in Needham, Massachusetts or
at such other location as may be designated from time to time by the Board of
Directors of the Company.
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Notwithstanding the foregoing, Executive shall perform such services at such
other locations as may be required for the proper performance of his duties
hereunder, and Executive recognizes that such duties may involve travel.
8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION
(a) Executive's employment hereunder may be terminated at any time:
(i) upon the determination by the Board of Directors that
Executive's performance of his duties has not been fully satisfactory for any
reason which would not constitute justifiable cause (as hereinafter defined)
upon thirty (30) days' prior written notice to Executive; or
(ii) upon the determination by the Board of Directors that
there is justifiable cause (as hereinafter defined) for such termination upon
ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter defined in
subsection (c) herein) pursuant to subsection (g) hereof.
(c) For the purposes of this Agreement, the term "disability" shall
mean the inability of Executive, due to illness, accident or any other physical
or mental incapacity, substantially to perform his duties for a period of three
(3) consecutive months or for a total of six (6) months (whether or not
consecutive) in any twelve (12) month period during the term of this Agreement,
as reasonably determined by the Board of Directors of the Company after
examination of Executive by an independent physician reasonably acceptable to
Executive.
(d) For the purposes hereof, the term "justifiable cause" shall mean
and be limited to: any repeated willful failure or refusal to perform any of the
duties pursuant to this Agreement where such conduct shall not have ceased
within 10 days following written warning from the Company; Executive's
conviction (which, through lapse of time or otherwise, is not subject to appeal)
of any crime or offense involving money or other property of the Company or its
subsidiaries or affiliates or which constitutes a felony in the jurisdiction
involved; Executive's performance of any act or his failure to act, as to which
if Executive were prosecuted and convicted, a crime or offense involving money
or property of the Company or its subsidiaries or affiliates, or a crime or
offense constituting a felony in the jurisdiction involved, would have occurred;
any unauthorized disclosure by Executive to any person, firm or corporation
other than the Company, its subsidiaries or affiliates and their respective
directors, officers and employees (or other persons fulfilling similar
functions), of any confidential information or trade secret of the Company or
any of its subsidiaries or affiliates; any attempt by Executive to secure any
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personal profit in connection with the business of the Company or any of its
subsidiaries and affiliates; or the engaging by Executive in any business other
than the business of the Company and its subsidiaries and affiliates which
unreasonably interferes with the performance of his duties hereunder. Upon
termination of Executive's employment for justifiable cause, this Agreement
shall terminate immediately and Executive shall not be entitled to any amounts
or benefits hereunder other than such portion of Executive's annual salary and
reimbursement of expenses pursuant to Section 5 hereof as has been accrued
through the date of his termination of employment.
(e) If the Company terminates this Agreement without "justifiable
cause" as provided in paragraph 8 (a) (i) above, the Company shall pay Executive
the lesser of: (i) the base salary for the remaining term of this Agreement or
(ii) an amount equal to one half of the Executive's annual base salary. If the
remaining term of this Agreement on the date of termination is more than the six
(6) month period for which Executive is compensated pursuant to (ii) above, the
Executive must make a good faith effort to find new employment and mitigate his
alleged damages and any costs and expenses to the Company. The Company will pay
any amount due and owing under (i) and (ii) above in accordance with the payment
schedule in 3 (a), until set amount is payable in full.
(f) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary and reimbursement of expenses pursuant to Section 5 as has been
accrued through the date of his death.
(g) Upon Executive's "disability", the Company shall have the right
to terminate Executive's employment. Notwithstanding any inability to perform
his duties, Executive shall be entitled to receive his base salary and
reimbursement of expenses pursuant to Section 5 as provided herein until he
begins to receive long-term disability insurance benefits under the policy
provided by the Company pursuant to Section 6 hereof. Any termination pursuant
to this subsection (g) shall be effective on the later of (i) the date 30 days
after which Executive shall have received written notice of the Company's
election to terminate or (ii) the date he begins to receive long-term disability
insurance benefits under the policy provided by the Company pursuant to Section
6 hereof.
(h) Upon the resignation of Executive in any capacity, that
resignation will be deemed to be a resignation from all offices and positions
that Executive holds with respect to the Company and any of its subsidiaries and
affiliates.
(i) In the event Executive is terminated without justifiable cause
(as defined herein) within one (1) year after a Change of Control has occurred,
Executive shall receive in full satisfaction of any obligation relating to
Executive's employment or the termination thereof the greater of: (a) the base
salary for the remaining term of this Agreement, or (b) an amount equal to
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the current base salary for one (1) year. The Company must make a lump sum
payment of all money due and owing within fifteen (15) days of termination.
(j) For the purposes of the paragraph 8, "Changes of Control" shall
mean (i) any sale of all or substantially all of the assets of the Company to
any person or group of related persons within the meaning of Section 13 (d) of
the Securities Exchange Act of 1934, as amended ("Group"), (ii) any acquisition
by any person or Group of shares of capital stock of the Company representing
more than 50% of the aggregate voting power of the outstanding capital stock of
the Company entitled under ordinary circumstances to elect the Directors of the
Company ("Voting Stock") or (iii) any replacement of a majority of the Board of
Directors of the Company over the twelve-month period following the acquisition
of shares of the capital stock of the Company representing more than 10% of the
Voting Stock by any person or Group which does not currently own more than 10%
of such Voting Stock (unless such replacement shall have been approved by the
vote of the majority of the Directors then in office who either were members of
the Board of Directors at the beginning of such twelve-month period or whose
elections as Directors was previously so approved).
9. REPRESENTATION AND AGREEMENTS OF EXECUTIVE
(a) Executive represents and warrants that he is free to enter into
this Agreement and to perform the duties required hereunder, and that there are
no employment contracts or understandings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder.
(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection with the Company's obtaining life insurance
on the life of Executive, and any other type of insurance or fringe benefit as
the Company shall determine from time to time to obtain.
10. NON-COMPETITION
(a) Executive agrees that during his employment by the Company and
during the one year period following the termination of Executive's employment
hereunder (the "Non-Competitive Period"), Executive shall not, directly or
indirectly, as owner, partner, joint venturer, stockholder, employee, broker,
agent, principal, trustee, corporate officer, director, licensor, or in any
capacity whatsoever, engage in, become financially interested in, be employed
by, render any consultation or business advice with respect to, or have any
connection with, any business which is competitive with products or services of
the Company or any of its subsidiaries and affiliates, in any geographic area in
the United States of America where, at the time of the termination of his
employment hereunder, the business of the Company or any of its subsidiaries and
affiliates was being conducted or was proposed to be conducted in any manner
whatsoever; provided, however, that Executive may own any securities of any
corporation which is engaged in such business and is publicly owned and traded
but in an amount not to exceed at any one time one
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percent (1%) of any class of stock or securities of such corporation. In
addition, Executive shall not, during the Non-Competitive Period, notify
directly or indirectly, request or cause any suppliers or customers with whom
the Company or any of its subsidiaries and affiliates has a business
relationship to cancel or terminate any such business relationship with the
Company or any of its subsidiaries and affiliates or solicit, interfere with or
entice from the Company any employee (or former employee) of the Company.
(b) If any portion of the restrictions set forth in this Section 10
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company conducts business
throughout the Eastern portion of United States (all states east of the
Mississippi River and Missouri) , that its sales and marketing prospects are for
continued expansion throughout the United States and that, therefore, the
territorial and time limitations set forth in this Section 10 are reasonable and
properly required for the adequate protection of the business of the Company and
its subsidiaries and affiliates. In the event any such territorial or time
limitation is deemed to be unreasonable by a court of competent jurisdiction,
Executive agrees to the reduction of the territorial or time limitation to the
area or period which such court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary or affiliate shall not constitute a
defense to the enforcement by the Company or any subsidiary or affiliate of the
foregoing restrictive covenants, but such claim or cause of action shall be
litigated separately.
11. INVENTIONS AND DISCOVERIES
(a) Upon execution of this Agreement and thereafter Executive shall
promptly and fully disclose to the Company, and with all necessary detail for a
complete understanding of the same, all existing and future developments,
know-how, discoveries, inventions, improvements, concepts, ideas, writings,
formulae, processes and Methods (whether copyrightable, patentable or otherwise)
made, received, conceived, acquired or written during working hours, or
otherwise, by Executive (whether or not at the request or upon the suggestion of
the Company) during the period of his employment with, or rendering of advisory
or consulting services to, the Company or any of its subsidiaries and
affiliates, solely or jointly with others in or relating to any activities of
the Company or its subsidiaries and affiliates known to him as a consequence of
his employment or the rendering of advisory and consulting services hereunder
(collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Executive further agrees to deliver to the Company any and
all drawings, notes, specifications and data relating to the Subject Matter, and
to execute, acknowledge and deliver all such further papers,
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including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter; provided, however, that Executive shall be compensated in a timely
manner at the rate of $1,000 per day (or portion thereof), plus out-of-pocket
expenses incurred in rendering such assistance or giving or preparing to give
such testimony if it is required after the termination of this Agreement.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
(a) Executive shall not, during the term of this Agreement, or at
any time following termination of this Agreement, directly or indirectly,
disclose or permit to be known (other than as is required in the regular course
of his duties (including without limitation disclosures to the Company's
advisors and consultants) or as required by law (in which case Executive shall
give the Company prior written notice of such required disclosure) or with the
prior written consent of the Board of Directors of the Company), to any person,
firm or corporation, any confidential information acquired by him during the
course of, or as an incident to, his employment or the rendering of his advisory
or consulting services hereunder, relating to the Company or any of its
subsidiaries and affiliates, the directors of the Company or its subsidiaries
and affiliates, any supplier or customer of the Company or any of their
subsidiaries and affiliates, or any corporation, partnership or other entity
owned or controlled, directly or indirectly, by any of the foregoing, or in
which any of the foregoing has a beneficial interest, including, but not limited
to, the business affairs of each of the foregoing. Such confidential information
shall include, but shall not be limited to, proprietary technology, trade
secrets, patented processes, research and development data, know-how, market
studies and forecasts, financial data, competitive analyses, pricing policies,
employee lists, personnel policies, the substance of agreements with customers,
suppliers and others, marketing or dealership arrangements, servicing and
training programs and arrangements, supplier lists, customer lists and any other
documents embodying such confidential information. This confidentiality
obligation shall not apply to any confidential information which thereafter
becomes publicly available other than pursuant to a breach of this Section 12(a)
by Executive.
(b) All information and documents relating to the Company and its
affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof then in Executive's possession or control
shall be returned and left with the Company.
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13. SPECIFIC PERFORMANCE
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by a court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION
No amendment or alteration of the terms of this Agreement shall be
valid unless made in writing and signed by both of the parties hereto.
15. GOVERNING LAW
This Agreement shall be governed by, and construed and enforced in
accordance with the substantive laws of The Commonwealth of Massachusetts,
without regard to its principles of conflicts of laws.
16. SEVERABILITY
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
17. NOTICES
Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand or courier, or sent by
certified mail, return receipt requested, to the addresses set forth above or
such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or at the
expiration of three days in the event of a mailing.
18. WAIVER OR BREACH
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed as a waiver of
any subsequent breach by that same party.
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19. ENTIRE AGREEMENT AND BINDING EFFECT
This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, supersedes all prior agreements, both
written and oral, between the parties with respect to the subject matter hereof,
and shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, heirs, distributors, successors and
assigns.
20. SURVIVAL.
Except as otherwise expressly provided herein, the termination of
Executive's employment hereunder or the expiration of this Agreement shall not
affect the enforceability of Sections 5, 8, 10, 11, 12 and 13 hereof.
21. FURTHER ASSURANCES
The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
22. HEADINGS
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
23. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, under
seal, as of the date and year first above written.
DESIGNS, INC.
By: /s/ XXXX X. XXXXXXX 3/31/2000
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Its: PRESIDENT & CEO
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/s/ XXXXX XXXXX
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Xxxxx Xxxxx
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