Employment Agreement dated as of March 31, 2000, between RDF ACQUISITION
CORP., a Delaware corporation (the "Company") and XXXXXX X. XXXXXX (the
"Executive").
BACKGROUND
WHEREAS:
A. The Company has entered into an Asset Purchase Agreement with RUE DE
FRANCE, INC. ("RDF"), the shareholders of RDF and XXXXXXX XXXXXX CORPORATION
("LVC") dated as of March 31, 2000, (the "Asset Purchase Agreement") to purchase
substantially all of the assets of RDF;
B. The Executive has been a shareholder, director and officer of RDF, and
as such has substantial experience that has value to the Company;
C. The Company desires to employ the Executive on the terms and subject to
the conditions hereinafter set forth; and
D. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto agree as
follows:
1. EMPLOYMENT. (a) The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending five (5) years from the date hereof unless sooner terminated
pursuant to the terms hereof (the "Initial Employment Period").
(b) After the expiration of the Initial Employment Period, this Agreement
shall continue at will terminable upon six (6) months' prior written notice by
either party to the other, which notice may be given at any time provided the
effective date of termination set forth in such notice is on or after the end of
the Initial Employment Period. (The entire period of employment is hereinafter
referred to as the "Employment Period".)
2. DUTIES. During the Employment Period, the Executive shall be employed by
the Company as its President and shall perform such duties and services
consistent with such position as may be assigned to the Executive by the Board
of Directors of the Company. In
addition, Executive shall perform such other services for LVC and its Affiliates
as may be reasonably requested by the President or Chief Executive Officer or
Chairman of the Board of Directors of LVC, all without further compensation
hereunder from LVC or any such Affiliate; provided, however, that the parties
recognize that Executive's primary responsibilities shall be to manage and
promote the business of the Company and, accordingly, such other services shall
not be of a nature such that they would materially detract from the ability of
Executive to fulfill such responsibilities. The Executive shall devote
Executive's business time, attention and energies on a full-time basis to the
performance of the duties and responsibilities hereunder.
3. COMPENSATION; BENEFITS; REIMBURSEMENT.
(a) BASE SALARY. During the Employment Period, the Company shall pay to the
Executive an annual base salary of One Hundred Thousand ($100,000) Dollars (such
salary being referred to herein as the "Base Salary"). The Base Salary shall be
payable in such installments (but not less frequently than monthly) as is the
policy of the Company.
(b) BENEFITS. During the Employment Period, the Executive shall be entitled
to such benefits (the "Benefit Arrangements") as are generally made available
from time to time to Vice Presidents of LVC who are not members of LVC's
Management Committee (other than benefits under LVC's bonus policy) subject to
the right of the Company to amend or terminate any or all such Benefit
Arrangements.
(c) REIMBURSEMENT OF EXPENSES. During the Employment Period, the Company
shall reimburse the Executive, in accordance with the policies and practices of
LVC in effect from time to time with respect to Vice Presidents of LVC who are
not members of its Management Committee, for all reasonable and necessary
traveling expenses and other disbursements incurred by Executive for or on
behalf of the Company in connection with the performance of Executive's duties
hereunder upon presentation by the Executive to the Company of appropriate and
timely documentation therefor.
(d) DEDUCTIONS. The Company shall deduct from any payments to be made by it
to the Executive under this Agreement any amounts required to be withheld in
respect of any Federal, state or local income or other taxes and any amounts
required to be deducted pursuant to the terms of the Benefit Arrangements.
4. PERFORMANCE BONUSES.
(a) The Company agrees to pay to the Executive a bonus of Fifty Thousand
($50,000) Dollars for each EBT Year during the Employment Period in which the
Company earns one-half (1/2) or more of the Projected EBT for such year set
forth in Schedule 1.5(a) to the Asset Purchase Agreement (the "Annual
Performance Bonus").
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(b) EBT shall be determined in accordance with generally accepted
accounting principles consistently applied except that the EBT of the Company
for the period March 1, 2000 through the Closing Date shall be added to the
Company's EBT for the First EBT Year and except that the amortization of any
goodwill or any other intangible assets created as a result of the purchase of
the Purchased Assets shall not be deducted and if any functions are performed
for the Company by LVC or any of its Affiliates such as, but not limited to,
accounting, warehousing, purchasing or distribution, then the cost for such
functions shall be charged to the Company as set forth in Schedule 1.5(b) to the
Asset Purchase Agreement. In computing EBT, the Company shall be charged
interest, fees and costs on all borrowings both short term and long term,
outstanding intercompany balances, capital invested in the Company by LVC
(excepting the Fixed Portion of the Purchase Price and the Contingent Portion of
the Purchase Price) and letters of credit at LVC's cost to borrow money or to
establish letter of credits, as the case may be.
(c) The sales of all products using the Rue de France service xxxx as well
as the sales of any other collection of products under any other name whether
similar or dissimilar to RDF's current line of products or price points and
whether through a catalog, website or other direct marketing medium or through
retail stores (each, a "New Business Initiative") which New Business Initiative
was developed by Executive with the approval of LVC shall be conducted by the
Company or if conducted by LVC, the Company shall be given credit for the EBT
generated by the sales of such products. The foregoing shall not prevent LVC
from including in its catalogs products offered for sale by the Company and VICE
VERSA. Any such New Business Initiative proposed by Executive shall be subject
to the same review and capital budget process as is required by the policies of
LVC in effect from time to time with respect to such matters for LVC.
(d) A calculation of the Company's EBT in reasonable detail shall be
delivered to Executive within ninety (90) days following the end of each EBT
Year during the Initial Employment Period, and, if it shows that the Annual
Performance Bonus has been earned for such EBT Year, then it shall be
accompanied by payment of the same. The payment of any earned Annual Performance
Bonus shall be conditioned upon Executive being employed by the Company through
the end of the applicable EBT Year; provided, however, the foregoing condition
shall not apply if the Company has terminated Executive's employment without
Cause or Executive has terminated Executive's employment hereunder for Good
Reason (as Cause and Good Reason are hereinafter defined), provided, further,
however, if Executive's employment is terminated by reason of Executive's death
or because Executive becomes disabled (defined below), then any Annual
Performance Bonus which would otherwise be due Executive shall be pro rated in
the year this Agreement is so terminated by multiplying such Annual Performance
Bonus by a fraction, the numerator of which is equal the number of days elapsed
from the beginning of such EBT Year until the termination of this Agreement and
the denominator of which is equal to 365 days. The calculation of the Company's
EBT shall be final and binding upon the Executive unless the Executive objects
to the same within thirty (30) days after Executive receives the Company's
calculation of the same. Such objections shall be in writing and shall set forth
in reasonable detail the basis of such objections. If the calculation of the
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Company's EBT is timely disputed by the Executive and the Executive and the
Company cannot resolve such dispute within thirty (30) days after the Company
receives the Executive's written objections, then such dispute shall be
submitted to the American Arbitration Association in the City of New York for
determination in accordance with its rules, and the fees and expenses of the
arbitrators and the American Arbitration Association shall be borne equally by
the parties.
5. TERMINATION
(a) The Company shall be entitled, in accordance with the procedures set
forth below, to terminate this Agreement and to discharge the Executive for
"Cause" without further obligation or liability on the part of the Company under
the terms of this Agreement or otherwise relating to Executive's employment
except for accrued compensation and benefits. The term Cause shall be limited to
the following grounds:
(i) The Executive materially breaches any of Executive's obligations
to the Company hereunder or fails to comply with any material written
policy of the Company which is generally applicable to employees at
Executive's level; provided, however, if such breach is capable of being
remedied (a "Remediable Obligation"), then the Executive shall have a
period of ten (10) business days to cure such breach after Executive has
received written notice from the Company specifying such breach in
reasonable detail;
(ii) The Executive shall materially breach any such Remediable
Obligation on a second occasion after Executive has received written notice
of such breach as provided in subsection 5(a)(i) above;
(iii) Conviction of a felony crime;
(iv) Theft or misappropriation of the property of the Company or of
any of its Affiliates;
(v) Intentionally making a material false written statement regarding
the affairs of the Company to a director or auditor or attorney, or to an
officer, of either the Company or LVC;
(vi) Intentionally making a material false oral statement regarding
the affairs of the Company to a director or auditor or attorney, or to an
officer, of either the Company or LVC; provided, however, that such oral
statement shall have been made by Executive to two (2) or more of such
persons at either the same or different times; and
(vii) Executive shall become disabled.
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For purposes of this Agreement, "disabled" shall mean an illness,
disability or other incapacity (whether physical or mental) which has prevented
Executive from performing Executive's regular duties on a full-time basis for
ninety (90) consecutive days, or ninety (90) days in any consecutive twelve (12)
month period. In the event Executive disputes that Executive is disabled and
provides to the Company a written opinion of a licensed physician of the State
of Rhode Island (the "Executive's Physician") to that effect at Executive's
expense, then Executive agrees to submit to a physical examination by a licensed
physician of the State of New York chosen by the Company (the "Company's
Physician") at the Company's expense. If the Company's Physician issues a
written opinion to the effect that Executive is disabled, then such dispute
shall be submitted to a third physician chosen jointly by the Executive and the
Company (the "Neutral Physician"). If the Executive and the Company cannot agree
upon the Neutral Physician within ten (10) days after the issuance of the
Company's Physician's opinion, then either party may apply to the American
Arbitration Association for the appointment of the Neutral Physician. The
determination of the Neutral Physician shall be final and binding upon the
parties hereto. The fees and expenses of the Neutral Physician and, if
necessary, the American Arbitration Association shall be borne equally by the
parties.
(b) (i) In the event the Company terminates Executive's employment
without Cause during the Initial Employment Period (i.e., not pursuant to
the provisions of Section 5(a) above) or if Executive shall terminate this
Agreement during the Initial Employment Period for Good Reason as defined
below, then the Company shall pay to Executive in accordance with its then
customary payroll practices a severance amount equal to One Hundred
Thousand ($100,000) Dollars per annum (such amount not to be increased if
Executive's Base Salary is increased hereunder after the date hereof) plus,
if earned, the Annual Performance Bonus until the earlier of (x) the
expiration of the Initial Employment Period and (y) the date Executive
becomes employed by or becomes a consultant to anyone else (the "Severance
Period"). Executive shall be entitled to terminate this Agreement for "Good
Reason" if the Company materially breaches any of its obligations to
Executive hereunder; provided, however, if such breach is capable of being
remedied, then the Company shall have a period of ten (10) business days to
cure such breach after it has received written notice from Executive
specifying such breach in reasonable detail. Executive shall not be
obligated to mitigate damages. Although Executive shall not be considered
an employee of the Company during the Severance Period for vesting or any
other purpose whatsoever, Executive shall be entitled to continued medical
insurance and life insurance coverage under the Company's medical and life
insurance plans in effect from time to time during the Severance Period.
(ii) The above provisions are intended to fully compensate Executive
for a termination by the Company without Cause or a termination by
Executive for Good Reason and Executive shall have no other or further
claim against the Company for wrongful discharge under the terms of this
Agreement, pursuant to the Company's policies or under any Federal, state
or local law relating to termination of Executive's employment by the
Company.
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(iii) Notwithstanding the termination of this Agreement by the Company
without Cause or by the Executive with Good Reason, Executive's obligations
under Section 3.1 of the Asset Purchase Agreement and Executive's
obligations under the Intellectual Property Protection Agreement executed
simultaneously herewith shall continue and in addition to any and all other
legal and equitable remedies available to the Company under Section 3.1 of
the Asset Purchase Agreement or under the Intellectual Property Protection
Agreement, the Company's obligation to pay severance and, if earned, the
Annual Performance Bonus to Executive under this Section 5(b) shall
terminate if Executive violates any of the provisions thereof.
(c) The term of employment of Executive hereunder shall terminate in the
event of the death of Executive without further obligation or liability on the
part of the Company under the terms of this Agreement or otherwise relating to
Executive's employment, except that Executive shall be entitled to receive all
accrued Base Salary and, if earned, a pro rata portion of the Annual Performance
Bonus as provided in Section 4 hereof.
(d) If the Executive terminates her employment at any time without Good
Reason, then the Company shall have no further obligation or liability to
Executive under the terms of this Agreement or otherwise relating to Executive's
employment except for Base Salary and benefits accrued to the termination date
and payment of the Annual Performance Bonus but only if earned and payable to
her pursuant to the provisions of this Agreement. Notwithstanding any
termination of this Agreement by the Executive without Good Reason, Executive
shall remain obligated under Section 3.1 of the Asset Purchase Agreement and
under the Intellectual Property Protection Agreement.
6. CONFIDENTIALITY; NON-COMPETITION; RIGHTS TO PROPRIETARY PROPERTY.
In consideration of Executive's employment hereunder and the consummation
of the transactions contemplated under the Asset Purchase Agreement, the
Executive agrees to execute the Intellectual Property Protection Agreement
annexed hereto as Exhibit A. In addition, Executive acknowledges that she is
bound by the provision of Section 3.1 of the Asset Purchase Agreement, which
Section is titled "Confidentiality; Non-Competition".
7. KEY PERSON LIFE INSURANCE. Executive agrees to cooperate with the
Company including submitting to medical examinations and providing medical and
other information to life insurance carriers to enable the Company to obtain key
person life insurance on Executive's life for the benefit of the Company.
Executive hereby represents and warrants to the Company that to Executive's
knowledge Executive's life is insurable at no worse than standard rates.
8. EXECUTIVE'S REPRESENTATIONS. The Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by the Executive does not and will not conflict with, breach, violate
or cause a default under any agreement, contract or instrument to which the
Executive is a party or any judgment, order or decree to
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which the Executive is subject, (ii) the Executive is not a party to or bound by
any employment agreement, consulting agreement, noncompete agreement,
confidentiality agreement or similar agreement with any other person or entity
and (iii) upon the execution and delivery of this Agreement by the Company, this
Agreement will be a valid and binding obligation of the Executive, enforceable
in accordance with its terms.
9. GENERAL PROVISIONS.
(a) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior agreements or understandings
between the parties with respect thereto. This Agreement shall not be altered or
otherwise amended or terminated (except as provided in Sections 1(b) and 5
hereof) except pursuant to an instrument in writing signed by each of the
parties hereto.
(b) DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provisions of
this Agreement.
(c) NOTICES. All notices or other communications pursuant to this Agreement
shall be in writing and shall be deemed to be sufficient if telecopied or sent
by nationally-recognized, overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to the Company, to:
c/o Xxxxxxx Xxxxxx Corporation
Xxx Xxxxxx Xxxx
Xxx, Xxx Xxxx 00000-0000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
with copies to:
Salon, Marrow, Xxxxxxx & Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Salon
Telecopier: (000) 000-0000
if to the Executive, to:
Xxxxxx X. Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxx 00000
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with copies to:
Xxxxxx & Xxxxxxx, LLP
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxxx
Telecopier: (000) 000-0000
All such notices and other communications shall be deemed to have been delivered
and received (A) in the case of delivery by telecopy, on the date of such
delivery if delivery is confirmed on that date by telephone call with the
recipient and (B) in the case of delivery by nationally-recognized, overnight
courier, on the Business Day (defined below) following dispatch. As used herein,
"Business Day" shall mean any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are not required to be open.
Failure to accept a notice does not invalidate same.
(d) ARBITRATION. Except as hereinafter provided with respect to injunctive
relief, the parties agree to arbitrate any and all claims, controversies or
disputes arising under or out of this Agreement or relating in any way thereto.
All such claims, controversies or disputes shall be submitted to arbitration in
the City of New York, State of New York, to arbitrators designated under and
pursuant to the Rules of the American Arbitration Association, and the
arbitration shall be had under the auspices of said Association and subject to
its rules. The parties consent to the jurisdiction of the Supreme Court of the
State of New York and of any United States District Court sitting in the State
of New York with respect to any and all proceedings relating to any such
arbitration, and the parties further agree that any and all process and notices
of motions or applications in relation to any such arbitration may be served
upon a party personally or by registered or certified mail, return receipt
requested. Such service may be accomplished either within or without the State
of New York, and such notice shall be given of all applications and hearings as
is provided by the laws of the State of New York. The award of the arbitrators
shall be final and binding upon the parties and judgment thereon may be entered
as provided by the laws of the State of New York. Executive acknowledges that
the Company's remedy at law for breach by Executive of the provisions of the
Intellectual Property Protection Agreement is inadequate. Accordingly, Executive
agrees that in addition to all other rights and remedies which the Company may
have, the Company shall have the right to apply for injunctive relief in the
Supreme Court of the State of New York or the United States District Courts
sitting in the State of New York (or any other court of competent jurisdiction)
and Executive consents to the IN PERSONAM jurisdiction of the Supreme Court of
the State of New York or the United States District Courts sitting in the State
of New York whether or not Executive is then residing in the State of New York.
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(e) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION OTHER THAN THE STATE OF NEW YORK) TO
BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF
NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT,
EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE
SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(f) BENEFITS OF AGREEMENT; ASSIGNMENT. The terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, representatives, heirs and estate, as
applicable. If this Agreement is assigned by the Company in connection with the
sale of all or substantially all of the operating assets of the Company and the
obligations hereunder of the Company are assumed in writing by the purchaser of
such assets, then in such event the Company shall have no further liability
hereunder to the Executive. Anything contained herein to the contrary
notwithstanding, this Agreement shall not be assignable by the Executive.
(g) WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party must be in writing and shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
(h) SEVERABILITY. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
(i) INTERPRETATION AND CONSTRUCTION.
(i) This Agreement shall be construed according to its fair meaning as
if prepared jointly by the parties hereto.
(ii) Each section, subsection and lesser section of this Agreement
constitutes a separate and distinct undertaking, covenant and/or provision
hereof.
(iii) This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which shall constitute but one and
the same instrument which may be sufficiently evidenced by one counterpart.
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IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the date first above written.
RDF ACQUISITION CORP.
By:
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Xxxxx X. Xxxxx, President
--------------------------------------
XXXXXX X. XXXXXX
The undersigned XXXXXXX XXXXXX CORPORATION does hereby unconditionally
guaranty the due and timely performance by the Company of its obligations under
the foregoing Employment Agreement between the Company and Xxxxxx X. Xxxxxx.
Dated: As of March 31, 2000
XXXXXXX XXXXXX CORPORATION
By:
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Xxxxxxx Xxxxxx,
Chief Executive Officer
