Exhibit 10.1
EMPLOYMENT AGREEMENT
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This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
this 30th day of July 2008 (the "Effective Date"), by and between Hampshire
Group, Limited, a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxx
(the "Executive").
W I T N E S S E T H :
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WHEREAS, Executive is currently employed by the Company as its President
and Chief Executive Officer; and
WHEREAS, Executive is a party to (i) that certain employment agreement by
and between Executive and Hampshire Designers, Inc. (a subsidiary of the
Company), dated July 1, 2005 (the "Prior Employment Agreement"), (ii) that
certain letter agreement by and between Executive and the Company, dated March
28, 2007 (the "Change in Control Letter", and together with the Prior Employment
Agreement, the "Prior Agreements"), and (iii) that certain letter agreement by
and between Executive and the Company, dated October 8, 2007 (the "Deferred
Compensation Agreement"); and
WHEREAS, the Company desires to continue to employ Executive and to enter
into this Agreement embodying the terms of such employment, and Executive
desires to enter into this Agreement and to accept such continuing employment,
subject to the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are mutually acknowledged, the Company and Executive hereby
agree as follows:
Section 1. Definitions.
(a) "Accrued Obligations" shall mean (i) all accrued but unpaid Base Salary
through the date of termination of Executive's employment, (ii) accrued but
unpaid vacation, (iii) any unpaid or unreimbursed expenses incurred in
accordance with Section 7 below, and (iv) any benefits provided under the
Company's Executive benefit, incentive, and equity plans upon a termination of
employment, in accordance with the terms contained therein and applicable award
agreements.
(b) "Agreement" shall have the meaning set forth in the preamble hereto.
(c) "Annual Bonus" shall have the meaning set forth in Section 4(b) below.
(d) "Average Total Compensation" shall mean the average Total Annual
Compensation paid or payable to Executive over the three (3) fiscal years
immediately preceding the fiscal year either in which Executive's employment
with the Company is terminated or during which a Change in Control occurs, as
applicable.
(e) "Base Salary" shall mean the salary provided for in Section 4(a) below
or any increased salary granted to Executive pursuant to Section 4(a).
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cause" shall mean only (i) Executive's act(s) of gross negligence or
willful misconduct in the course of Executive's employment hereunder that is or
could reasonably be expected to be materially injurious to the Company or any
other member of the Company Group, (ii) willful failure or refusal by Executive
to perform in any material respect his duties or responsibilities, (iii)
misappropriation by Executive of any assets or business opportunities of the
Company or any other member of the Company Group, (iv) embezzlement or fraud
committed by Executive, or at his direction, (v) Executive's conviction of, or
pleading "guilty" or " no contest" to, (x) a felony or (y) any other criminal
charge that has, or could be reasonably expected to have, an adverse impact on
the performance of Executive's duties to the Company or any other member of the
Company Group or otherwise result in material injury to the reputation or
business of the Company or any other member of the Company Group, (vi) any
material violation of the policies of the Company, including but not limited to
those relating to sexual harassment or business conduct, and those otherwise set
forth in the manuals or statements of policy of the Company, or (vii)
Executive's material breach of this Agreement, including, without limitation,
Section 9 hereof. No act or failure to act, on the part of Executive, shall be
considered "willful" or resulting in "gross negligence" if it is done, or
omitted to be done, by Executive in good faith or with a reasonable belief that
Executive's action or failure to act was in the best interest of the Company.
Any act, or failure to act, based on a specific directive given pursuant to a
resolution adopted by the Board or the Executive Committee shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interest of the Company.
(h) "Change in Control" shall mean (i) individuals who, as of the Effective
Date, constitute the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided, that any person becoming
a director subsequent to the Effective Date, whose election or nomination for
election was approved by a vote of at least two-thirds (2/3rds) of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be an Incumbent Director; (ii) any
Person is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Voting
Securities"); provided, however, that the event described in this subsection
1(h)(ii) shall not be deemed to be a Change in Control by virtue of any of the
following acquisitions: (A) by the Company or any subsidiary of the Company in
which the Company owns more than 50% of the combined voting power of such entity
(a "Subsidiary"), (B) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, (C) by any underwriter
temporarily holding the Company's Voting Securities pursuant to an offering of
such Voting Securities, or (D) pursuant to a Non-Qualifying Transaction (as
defined in subsection 1(h)(iii) below); (iii) the consummation of a merger,
consolidation, statutory share exchange or similar form of corporate transaction
involving the
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Company or any Subsidiary that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of securities in the
transaction (a "Business Combination"), unless immediately following such
Business Combination: (A) more than 50% of the total voting power of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the Company's Voting Securities that were
outstanding immediately prior to such Business Combination (or, if applicable,
is represented by shares into which the Company's Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of the Company's Voting Securities among the holders thereof immediately prior
to the Business Combination, (B) no Person (other than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or indirectly,
of 30% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); (iv) a sale of all or substantially all of the Company's assets;
(v) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; (vi) the appointment as an executive officer of the
Company following the Effective Date of any shareholder or member of any
shareholder group (as such terms are defined under the Exchange Act) who
beneficially owns, directly or indirectly, in excess of five percent (5%) of the
Company's outstanding voting securities, or (vii) such other events as the Board
may designate. Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 50% of the Company's Voting Securities as a result of the acquisition of
the Company's Voting Securities by the Company which reduces the number of the
Company's Voting Securities outstanding; provided, that if after such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control shall then occur.
(i) "Change in Control Retention Payment" shall mean a lump sum cash
payment in an amount equal to two (2) times the Average Total Compensation.
(j) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(k) "Company" shall have the meaning set forth in the preamble hereto.
(l) "Company Group" shall mean the Company together with any direct or
indirect subsidiary of the Company or any direct or indirect parent of the
Company with respect to which Executive maintains operating control.
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(m) "Compensation Committee" shall mean the committee of the Board
designated to make compensation decisions relating to senior executive officers
of the Company Group. Prior to any time that such a committee has been
designated, the Board shall be deemed the Compensation Committee for purposes of
this Agreement.
(n) "Competitive Activities" shall mean any business activities in which
the Company or any other member of the Company Group engages (or has committed
plans to engage) during the Term of Employment.
(o) "Confidential Information" shall mean confidential or proprietary trade
secrets, client lists, client identities and information, information regarding
service providers, investment methodologies, marketing data or plans, sales
plans, management organization information, operating policies or manuals,
business plans or operations or techniques, financial records or data, or other
financial, commercial, business or technical information (i) relating to the
Company or any other member of the Company Group or (ii) that the Company or any
other member of the Company Group may receive belonging to suppliers, customers,
or others who do business with the Company or any other member of the Company
Group, but shall exclude any information that is or becomes available to the
public, in each case without the breach by Executive of Section 9(a) below, and
any information that became available to Executive on a non-confidential basis
from a source other than the Company or member of the Company Group which source
was not under an obligation to the Company or other member of the Company Group
(whether contractual, legal or fiduciary) to keep such information confidential.
(p) "Deferred Compensation Agreement" shall have the meaning set forth in
the preamble hereto.
(q) "Developments" shall have the meaning set forth in Section 9(e) below.
(r) "Disability" shall mean any physical or mental disability or infirmity
of Executive that results in his inability to perform his duties for a period of
(i) ninety (90) consecutive days or (ii) one hundred twenty (120)
non-consecutive days during any twelve (12) month period. Executive shall not be
deemed to have a Disability until after such 90-day or 120-day period, as
applicable, has expired.
(s) "Effective Date" shall have the meaning set forth in the preamble
hereto.
(t) "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same may be amended from time to time.
(u) "Executive" shall have the meaning set forth in the preamble hereto.
(v) "Executive Committee" shall mean the executive committee of the Board.
(w) "Good Reason" shall mean, without Executive's consent, (i) a material
diminution in Executive's title, duties or responsibilities, (ii) a material
reduction in Base Salary (other than pursuant to an across-the-board reduction
applicable to all similarly situated executives, but in no case greater than a
10% reduction), (iii) the failure of the Company to pay any compensation
hereunder when due, (iv) the relocation of Executive's principal place of
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employment (as provided in Section 3(c) hereof) more than thirty (30) miles from
its current location, or (v) any other material breach of this Agreement by the
Company. Notwithstanding the foregoing, during the Term of Employment, in the
event that the Board and/or the Executive Committee reasonably believes that
Executive may have engaged in conduct that is reasonably likely to constitute
Cause hereunder, the Board and/or the Executive Committee may, in its sole and
absolute discretion, suspend Executive from performing his duties hereunder, and
any such suspension shall in no event constitute an event pursuant to which
Executive may terminate employment with Good Reason; provided, that no such
suspension shall alter the Company's obligations under this Agreement during
such period of suspension.
(x) "Interfering Activities" shall mean (i) encouraging, soliciting, or
inducing, or in any manner attempting to encourage, solicit, or induce, any
individual employed by, or individual or entity providing consulting services
to, the Company or any other member of the Company Group to terminate such
employment or consulting services; provided, that the foregoing shall not be
violated by general advertising not targeted at employees or consultants of the
Company or any other member of the Company Group; (ii) hiring any individual who
was employed by the Company or any other member of the Company Group within the
six (6) month period prior to the date of such hiring; or (iii) encouraging,
soliciting, or inducing, or in any manner attempting to encourage, solicit, or
induce, any customer, supplier, licensee, or other business relation of the
Company or any other member of the Company Group to cease doing business with or
materially reduce the amount of business conducted with the Company or any other
member of the Company Group, or in any way interfere with the relationship
between any such customer, supplier, licensee, or business relation and the
Company or any other member of the Company Group.
(y) "Person" shall mean any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust
(charitable or non-charitable), unincorporated organization, or other form of
business entity.
(z) "Prior Agreements" shall have the meaning set forth in the recitals
hereto.
(aa) "Release Expiration Date" shall mean the date that is twenty-one (21)
days following the date upon which the Company timely delivers Executive the
release contemplated in Section 8(g) below, or in the event that the release is
delivered in connection with a termination of employment that is "in connection
with an exit incentive or other employment termination program" (as such phrase
is defined in the Age Discrimination in Employment Act of 1967), the date that
is forty-five (45) days following such delivery date.
(bb) "Restricted Area" shall mean any State of the United States of America
or any other jurisdiction in which the Company or any other member of the
Company Group engages (or has committed plans to engage) in business during the
Term of Employment or, following termination of Executive's employment, was
engaged (or had committed plans to engage) in business at the time of such
termination of employment.
(cc) "Restricted Period" shall mean the period commencing on the Effective
Date and extending to the eighteen (18) month anniversary of Executive's
termination of employment for any reason.
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(dd) "Term of Employment" shall mean the period specified in Section 2
below.
(ee) "Total Annual Compensation" shall mean, with respect to each fiscal
year of the Company, the sum of (i) the Base Salary paid to Executive by the
Company (or Hampshire Designers, Inc., as applicable), and (ii) any
discretionary or performance-based bonus (excluding any retention bonus or
long-term incentive award granted to Executive by the Company) paid or payable
to Executive (including any amounts deferred by Executive) for services
performed entirely within such fiscal year. For the avoidance of doubt, for
purposes of determining the Annual Bonus to be used in the calculation of Total
Annual Compensation, the following amounts shall be included: (x) with respect
to the Annual Bonus paid or payable to Executive for services performed entirely
within the fiscal year ended December 31, 2005, the $175,000 payable pursuant to
Section 3(A)(ii) of the Prior Employment Agreement, and (y) with respect to the
Annual Bonus paid or payable to Executive for services performed entirely within
the fiscal year ended December 31, 2007, the "Special Bonus" (as defined in the
Deferred Compensation Agreement), and (z) with respect to any fiscal year, any
discretionary bonus paid or payable to Executive for services performed entirely
within such fiscal year (but specifically excluding any retention bonus (other
than as described in clauses (x) or (y) above) or long-term incentive award
granted to Executive by the Company).
Section 2. Acceptance and Term of Employment.
The Company agrees to continue to employ Executive, and Executive agrees to
continue to serve the Company on the terms and conditions set forth herein. The
Term of Employment shall commence on the Effective Date and shall continue until
terminated in accordance with Section 8 below.
Section 3. Position, Duties, and Responsibilities; Place of Performance.
(a) During the Term of Employment, Executive shall be employed and serve as
the President and Chief Executive Officer of the Company (together with such
other position or positions consistent with Executive's title as the Board
and/or the Executive Committee shall specify from time to time) and shall have
such duties typically associated with such title. Executive shall report
directly to the full Board and/or the Executive Committee. In addition,
Executive shall be nominated for election to the Board for so long as the
Executive is employed hereunder, so long as such nomination or election would
not, in the reasonable judgment of the Board, contravene any prohibitions or
guidelines for good governance under applicable law or the rules of any stock
exchange or body to those jurisdiction the Company is subject. Executive also
agrees to serve as an officer and/or director of any subsidiary of the Company
to the extent such service is consistent with his position with the Company, in
each case without additional compensation.
(b) Executive shall devote his full business time, attention, skill, and
best efforts to the performance of his duties under this Agreement and shall not
engage in any other business or occupation during the Term of Employment,
including, without limitation, any activity that (x) conflicts with the
interests of the Company or any other member of the Company Group, (y)
interferes with the proper and efficient performance of his duties for the
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Company, or (z) interferes with the exercise of his judgment in the Company's
best interests. Notwithstanding the foregoing, nothing herein shall preclude
Executive from (i) serving, with the prior written consent of the Board and/or
the Executive Committee, as a member of the board of directors or advisory
boards (or their equivalents in the case of a non-corporate entity) of
non-competing businesses and charitable organizations, (ii) engaging in
charitable activities and community affairs, and (iii) managing his personal
investments and affairs; provided, however, that the activities set out in
clauses (i), (ii), and (iii) shall be limited by Executive so as not to
materially interfere, individually or in the aggregate, with the performance of
his duties and responsibilities hereunder.
(c) Executive's principal place of employment shall be in Manhattan, New
York, although Executive understands and agrees that he may be required to
travel from time to time for business reasons.
Section 4. Compensation. During the Term of Employment, Executive shall be
entitled to the following compensation:
(a) Base Salary. Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Company (but no less
frequently than monthly), of not less than $800,000, with increases, if any, as
may be approved in writing by the Board or the Compensation Committee.
(b) Annual Bonus. Executive shall be eligible for an annual incentive bonus
award determined by the Board or the Compensation Committee in respect of each
fiscal year (including the 2008 fiscal year) during the Term of Employment (the
"Annual Bonus"), with the actual Annual Bonus payable being based upon the level
of achievement of annual Company and/or individual performance objectives for
such fiscal year, as determined by the Board or the Compensation Committee after
consultation with Executive. Notwithstanding the immediately preceding sentence,
to the extent that the Company adopts a bonus plan for its senior executive
officers, Executive shall participate in such plan and the actual Annual Bonus
payable to Executive shall be determined in a manner consistent with such bonus
plan.
(c) Long-Term Incentive and Equity-Based Plans. Executive shall be eligible
to participate in any long-term incentive and equity-based arrangements
generally available to the other senior executives of the Company and shall
receive such awards as the Board or the Compensation Committee, in its
discretion, shall grant Executive.
(d) Change in Control Payment. Upon any Change in Control that occurs
during the Term of Employment, within thirty (30) days following the Change in
Control, the Company (or its successor) shall pay Executive or Executive's
estate, as the case may be, the Change in Control Retention Payment (less any
applicable withholding).
Section 5. Executive Benefits.
During the Term of Employment, Executive shall be entitled to participate
in health, insurance, retirement and other benefits provided to other senior
executives of the Company. Executive shall also be entitled to the same number
of holidays, vacation, sick days
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and other benefits as are generally allowed to senior executives of the Company
in accordance with the Company policy in effect from time to time.
Section 6. Key-Man Insurance.
At any time during the Term of Employment, the Company shall have the right
to insure the life of Executive for the sole benefit of the Company, in such
amounts, and with such terms, as it may determine. All premiums payable thereon
shall be the obligation of the Company. Executive shall have no interest in any
such policy, but agrees to cooperate with the Company in taking out such
insurance by submitting to physical examinations, supplying all information
required by the insurance company, and executing all necessary documents,
provided that no financial obligation is imposed on Executive by any such
documents.
Section 7. Reimbursement of Business Expenses.
Executive is authorized to incur reasonable business expenses in carrying
out his duties and responsibilities under this Agreement and the Company shall
promptly reimburse him for all such reasonable business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy, as in effect from time to
time.
Section 8. Termination of Employment.
(a) General. The Term of Employment shall terminate upon the earliest to
occur of (i) Executive's death, (ii) a termination by reason of a Disability,
(iii) a termination by the Company with or without Cause, or (iv) a termination
by Executive with or without Good Reason. Upon any termination of Executive's
employment for any reason, except as may otherwise be requested by the Company
in writing and agreed upon in writing by Executive, Executive shall resign from
any and all directorships, committee memberships, and any other positions
Executive holds with the Company or any other member of the Company Group.
Notwithstanding anything herein to the contrary, the payment (or commencement of
a series of payments) hereunder of any nonqualified deferred compensation
(within the meaning of Section 409A of the Code) upon a termination of
employment shall be delayed until such time as Executive has also undergone a
"separation from service" as defined in Treas. Reg. 1.409A-1(h), at which time
such nonqualified deferred compensation (calculated as of the date of
Executive's termination of employment hereunder) shall be paid (or commence to
be paid) to Executive on the schedule set forth in this Section 8 as if
Executive had undergone such termination of employment (under the same
circumstances) on the date of his ultimate "separation from service."
(b) Termination Due to Death or Disability. Executive's employment shall
terminate automatically upon his death. The Company may terminate Executive's
employment immediately upon the occurrence of a Disability, such termination to
be effective upon Executive's receipt of written notice of such termination. In
the event Executive's employment is terminated due to his death or Disability,
Executive or his estate or his beneficiaries, as the case may be, shall be
entitled to:
(i) The Accrued Obligations;
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(ii) Any unpaid Annual Bonus in respect of any completed fiscal year
which has ended prior to the date of such termination, which amount shall
be paid at such time annual bonuses are paid to other senior executives of
the Company, but in no event later than March 15 of the fiscal year
following the fiscal year in which such termination occurred; and
(iii) A pro rata Annual Bonus in respect of the fiscal year in which
the date of such termination occurs, which amounts shall be paid at such
time annual bonus are paid to other senior executives, but in no event
later than March 15th of the year following the fiscal year in which such
termination occurred.
Following such termination of Executive's employment by reason of death or
Disability, except as set forth in this Section 8(b) and Section 24 hereof,
Executive shall have no further rights to any compensation or any other benefits
under this Agreement.
(c) Termination by the Company for Cause.
(i) The Company may terminate Executive's employment at any time for
Cause, effective upon Executive's receipt of written notice of such
termination; provided, however, that with respect to any Cause termination
relying on clause (ii), (vi) or (vii) of the definition of Cause set forth
in Section 1(g) above, Executive shall be given not less than ten (10)
days' written notice by the Board or the Executive Committee of the
Company's intention to terminate him for Cause, such notice to state in
detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for Cause is
based, and such termination shall be effective only at the expiration of
such ten (10) day notice period unless Executive has fully cured such act
or acts or failure or failures to act that give rise to Cause during such
period.
(ii) In the event the Company terminates Executive's employment for
Cause, he shall be entitled only to the Accrued Obligations. Following such
termination of Executive's employment for Cause, except as set forth in
this Section 8(c)(ii) and Section 24 hereof, Executive shall have no
further rights to any compensation or any other benefits under this
Agreement.
(d) Termination by the Company without Cause. The Company may terminate
Executive's employment at any time without Cause, effective upon Executive's
receipt of written notice of such termination. In the event Executive's
employment is terminated by the Company without Cause (other than due to death
or Disability), Executive shall be entitled to:
(i) The Accrued Obligations;
(ii) Any unpaid Annual Bonus in respect of any completed fiscal year
which has ended prior to the date of such termination, which amount shall
be paid at such time annual bonuses are paid to other senior executives of
the Company, but in no event later than March 15 of the fiscal year
following the fiscal year in which such termination occurred;
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(iii) A pro rata Annual Bonus in respect of the fiscal year in which
the date of such termination occurs, which amounts shall be paid at such
time annual bonus are paid to other senior executives, but in no event
later than March 15th of the year following the fiscal year in which such
termination occurred; and
(iv) If such termination occurs prior to a Change in Control or more
than a year after a Change in Control, a lump sum cash payment in an amount
equal to 1.5 times the Average Total Compensation, payable within thirty
(30) days following such termination.
Notwithstanding the foregoing, the payments and benefits described in
subsections (ii) through (iv) above shall immediately terminate, and the Company
shall have no further obligations to Executive with respect thereto, in the
event that Executive breaches any provision of Section 9 hereof. The termination
of Executive's payments and benefits shall not be effective unless and until
there shall have been delivered to Executive written notice by the Board or the
Executive Committee of the Company's decision to cease the payments and benefits
described in subsections (ii) through (vi) above, such notice to state in detail
the particular act or acts that constitute the grounds on which the termination
of such payments and benefits is based. Following such termination of
Executive's employment by the Company without Cause, except as set forth in this
Section 8(d) and Section 23, Executive shall have no further rights to any
compensation or any other benefits under this Agreement.
(e) Termination by Executive with Good Reason. Executive may terminate his
employment with Good Reason by providing the Company ten (10) days' written
notice setting forth in reasonable specificity the event that constitutes Good
Reason, which written notice, to be effective, must be provided to the Company
within sixty (60) days of the occurrence of such event. During such ten (10) day
notice period, the Company shall have a cure right (if curable), and if not
cured within such period, Executive's termination will be effective upon the
expiration of such cure period, and Executive shall be entitled to the same
payments and benefits as provided in Section 8(d) above for a termination by the
Company without Cause, subject to the same conditions on payment and benefits as
described in Section 8(d) above. Following such termination of Executive's
employment by Executive with Good Reason, except as set forth in this Section
8(e) and Section 23 hereof, Executive shall have no further rights to any
compensation or any other benefits under this Agreement.
(f) Termination by Executive without Good Reason. Executive may terminate
his employment without Good Reason by providing the Company thirty (30) days'
written notice of such termination. In the event of a termination of employment
by Executive under this Section 8(f), Executive shall be entitled only to the
Accrued Obligations. In the event of termination of Executive's employment under
this Section 8(f), the Company may, in its sole and absolute discretion, by
written notice accelerate such date of termination and still have it treated as
a termination without Good Reason. Following such termination of Executive's
employment by Executive without Good Reason, except as set forth in this Section
8(f) and Section 24 hereof, Executive shall have no further rights to any
compensation or any other benefits under this Agreement.
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(g) Release. Notwithstanding any provision herein to the contrary, prior to
payment of any amount or provision of any benefit pursuant to subsection (d), or
(e) of this Section 8 (other than the Accrued Obligations), Executive shall have
executed, on or prior to the Release Expiration Date, a customary general
release in favor of the Company Group in substantially the form attached hereto
as Exhibit A (as the same may be amended from time to time by the Company to
comply with applicable law), and any waiting periods contained in such release
shall have expired. If Executive fails to execute such release on or prior to
the Release Expiration Date, Executive shall not be entitled to any payments or
benefits pursuant to subsection (d), or (e) of this Section 8 (other than the
Accrued Obligations). Notwithstanding anything herein to the contrary, in any
case where the date of termination and the Release Expiration Date fall in two
separate taxable years, any payments required to be made to Executive that are
treated as deferred compensation for purposes of Section 409A of the Code shall
be made in the later taxable year.
Section 9. Restrictive Covenants. Executive acknowledges and agrees that
(A) the agreements and covenants contained in this Section 9 are (i) reasonable
and valid in geographical and temporal scope and in all other respects and (ii)
essential to protect the value of the business and assets of the Company Group,
and (B) by his employment with the Company, Executive will obtain knowledge,
contacts, know-how, training, and experience, and there is a substantial
probability that such knowledge, know-how, contacts, training, and experience
could be used to the substantial advantage of a competitor of the Company Group
and to the substantial detriment of the Company Group.
(a) Confidential Information. At any time during and after the end of the
Term of Employment, without the prior written consent of the Board or the
Executive Committee, except to the extent required by an order of a court having
jurisdiction or under subpoena from an appropriate government agency, in which
event, Executive shall use his best efforts to consult with the Board or the
Executive Committee prior to responding to any such order or subpoena, and
except as required in the performance of his duties hereunder or is required to
be disclosed by Executive in connection with the enforcement of his rights under
this Agreement or any other agreement between Executive and the Company or any
other member of the Company Group, Executive shall not disclose to or use for
the benefit of any third party any Confidential Information.
(b) Non-Competition. Executive covenants and agrees that during the
Restricted Period, Executive shall not, directly or indirectly, individually or
jointly, own any interest in, operate, join, control, participate as a partner,
director, principal, officer, or agent of, enter into the employment of, act as
a consultant to, or perform any services for, any Person (other than the Company
or any other member of the Company Group), that engages in any Competitive
Activities within the Restricted Area. Notwithstanding anything herein to the
contrary, this Section 9(b) shall not prevent Executive from (i) acquiring as an
investment securities representing not more than three percent (3%) of the
outstanding voting securities of any publicly held corporation or (ii) accepting
employment with any entity whose business is diversified but which engages in
Competitive Activities, so long as (A) Executive shall not, directly or
indirectly, render services or assistance to any division or part of such entity
that is in any way engaged in the Competitive Activities, and (B) the Company
shall have received, prior to the Executive rendering services to or assisting
such entity, written assurances from such
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entity that the Executive shall not, directly or indirectly, render services or
assistance to any division or part of such entity that is in any way engaged in
activities which are engaged in Competitive Activities.
(c) Non-Solicitation; Non-Interference. During the Restricted Period,
Executive shall not, directly or indirectly, for his own account or for the
account of any other Person, engage in Interfering Activities.
(d) Return of Documents. In the event of the termination of Executive's
employment for any reason, Executive shall deliver to the Company all of (i) the
property of the Company and any other member of the Company Group and (ii) the
documents and data of any nature and in whatever medium of the Company and any
other member of the Company Group, and he shall not take with him any such
property, documents or data, or any reproduction thereof, or any documents
containing or pertaining to any Confidential Information other than any
documents or data needed to complete his tax returns or which related to his
benefits under the Company's benefit and incentive plans.
(e) Works for Hire. Executive agrees that the Company shall own all right,
title, and interest throughout the world in and to any and all inventions,
original works of authorship, developments, concepts, know-how, improvements, or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Executive may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to practice
during the Term of Employment, whether or not during regular working hours,
provided they either (i) relate at the time of conception or development to the
actual or demonstrably proposed business or research and development activities
of any member of the Company Group; (ii) result from or relate to any work
performed for the Company or any member of the Company Group; or (iii) are
developed through the use of Confidential Information and/or Company resources
or in consultation with any personnel of the Company or any other member of the
Company Group (collectively referred to as "Developments"). Executive hereby
assigns all right, title, and interest in and to any and all of these
Developments to the Company. Executive agrees to assist the Company, at the
Company's expense, to further evidence, record and perfect such assignments, and
to perfect, obtain, maintain, enforce, and defend any rights specified to be so
owned or assigned. Executive hereby irrevocably designates and appoints the
Company and its agents as attorneys-in-fact to act for and on Executive's behalf
to execute and file any document and to do all other lawfully permitted acts to
further the purposes of the foregoing with the same legal force and effect as if
executed by Executive. In addition, and not in contravention of any of the
foregoing, Executive acknowledges that all original works of authorship that are
made by him (solely or jointly with others) within the scope of employment and
that are protectable by copyright are "works made for hire," as that term is
defined in the United States Copyright Act (17 U.S.C. ss. 101). To the extent
allowed by law, this includes all rights of paternity, integrity, disclosure,
and withdrawal and any other rights that may be known or referred to as "moral
rights." To the extent Executive retains any such moral rights under applicable
law, Executive hereby waives such moral rights and consents to any action
consistent with the terms of this Agreement with respect to such moral rights,
in each case, to the full extent of such applicable law. Executive will confirm
any such waivers and consents from time to time as requested by the Company.
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(f) Blue Pencil. If any court of competent jurisdiction shall at any time
deem the duration or the geographic scope of any of the provisions of this
Section 9 unenforceable, the other provisions of this Section 9 shall
nevertheless stand and the duration and/or geographic scope set forth herein
shall be deemed to be the longest period and/or greatest size permissible by law
under the circumstances, and the parties hereto agree that such court shall
reduce the time period and/or geographic scope to permissible duration or size.
Section 10. Injunctive Relief.
Without limiting the remedies available to the Company, Executive
acknowledges that a breach of any of the covenants contained in Section 9 hereof
may result in material irreparable injury to the Company Group for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of such a breach or threat
thereof, the Company (or any other member of the Company Group) shall be
entitled to seek a temporary restraining order and/or a preliminary or permanent
injunction, without the necessity of proving irreparable harm or injury as a
result of such breach or threatened breach of Section 9 hereof, restraining
Executive from engaging in activities prohibited by Section 9 hereof or such
other relief as may be required specifically to enforce any of the covenants in
Section 9 hereof. Notwithstanding any other provision to the contrary, the
Restricted Period shall be tolled during any period of violation of any of the
covenants in Section 9(b) or (c) hereof and during any other period required for
litigation during which the Company (or any other member of the Company Group)
seeks to enforce such covenants against Executive if it is ultimately determined
that Executive was in breach of such covenants.
Section 11. Representations and Warranties of Executive.
Executive represents and warrants to the Company that:
(a) Executive is entering into this Agreement voluntarily and that his
employment hereunder and compliance with the terms and conditions hereof will
not conflict with or result in the breach by him of any agreement to which he is
a party or by which he may be bound;
(b) Executive has not violated, and in connection with his employment with
the Company will not violate, any non-solicitation, non-competition, or other
similar covenant or agreement of a prior employer by which he is or may be
bound; and
(c) In connection with his employment with the Company, Executive will not
use any confidential or proprietary information he may have obtained in
connection with employment with any prior employer.
Section 12. Taxes.
The Company may withhold from any payments made under this Agreement all
applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law. Executive acknowledges and
represents that the Company has not provided any tax advice to him in connection
with this Agreement and that he has been advised by the Company to seek tax
advice from his own tax advisors regarding this Agreement
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and payments that may be made to him pursuant to this Agreement, including
specifically, the application of the provisions of Section 409A of the Code to
such payments.
Section 13. Set Off; Mitigation.
The Company's obligation to pay Executive the amounts provided and to make
the arrangements provided hereunder shall be subject to set-off, counterclaim,
or recoupment of amounts owed by Executive to the Company or its affiliates.
Executive shall not be required to mitigate the amount of any payment provided
for pursuant to this Agreement by seeking other employment or otherwise, and the
amount of any payment provided for pursuant to this Agreement shall not be
reduced by any compensation earned as a result of Executive's other employment
or otherwise.
Section 14. Delay in Payment.
Notwithstanding any provision in this Agreement to the contrary, any
payment otherwise required to be made hereunder to the Executive at any date as
a result of the termination of Executive's employment shall be delayed for such
period of time as may be necessary to meet the requirements of Section
409A(a)(2)(B)(i) of the Code. On the earliest date on which such payments can be
made without violating the requirements of Section 409A(a)(2)(B)(i) of the Code,
there shall be paid to the Executive, in a single cash lump sum, an amount equal
to the aggregate amount of all payments delayed pursuant to the preceding
sentence.
Section 15. Successors and Assigns; No Third-Party Beneficiaries.
(a) The Company. This Agreement shall inure to the benefit of the Company
and its respective successors and assigns. Neither this Agreement nor any of the
rights, obligations, or interests arising hereunder may be assigned by the
Company without Executive's prior written consent (which shall not be
unreasonably withheld, delayed, or conditioned), to a person or entity other
than an affiliate or parent entity of the Company, or their respective
successors; provided, however, that in the event of the merger, consolidation,
transfer, or sale of all or substantially all of the assets of the Company with
or to any other individual or entity, this Agreement shall, subject to the
provisions hereof, be binding upon and inure to the benefit of such successor,
and such successor shall discharge and perform all the promises, covenants,
duties, and obligations of the Company hereunder, it being agreed that in such
circumstances, the consent of Executive shall not be required in connection
therewith.
(b) Executive. Executive's rights and obligations under this Agreement
shall not be transferable by Executive by assignment or otherwise, without the
prior written consent of the Company; provided, however, that if Executive shall
die, all amounts then payable to Executive hereunder shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee, or other
designee, or if there be no such designee, to Executive's estate.
(c) No Third-Party Beneficiaries. Except as otherwise set forth in Section
8(b) or Section 15(b) hereof, nothing expressed or referred to in this Agreement
will be construed to give any person or entity other than the Company, the other
members of the
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Company Group, and Executive any legal or equitable right, remedy, or claim
under or with respect to this Agreement or any provision of this Agreement.
Section 16. Waiver and Amendments.
Any waiver, alteration, amendment, or modification of any of the terms of
this Agreement shall be valid only if made in writing and signed by each of the
parties hereto; provided, however, that any such waiver, alteration, amendment,
or modification is consented to on the Company's behalf by the Board or the
Executive Committee. No waiver by either of the parties hereto of their rights
hereunder shall be deemed to constitute a waiver with respect to any subsequent
occurrences or transactions hereunder unless such waiver specifically states
that it is to be construed as a continuing waiver.
Section 17. Severability.
If any covenants or such other provisions of this Agreement are found to be
invalid or unenforceable by a final determination of a court of competent
jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired,
and (b) the invalid or unenforceable term or provision hereof shall be deemed
replaced by a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision hereof.
Section 18. Governing Law and Jurisdiction.
This Agreement is governed by and is to be construed under the laws of the
State of New York, without regard to conflict of laws rules. Any dispute or
claim arising out of or relating to this Agreement or claim of breach hereof
(other than claims for injunctive relief, which shall be governed by Section 10
hereof) shall be brought exclusively in the Federal court in the State of New
York. By execution of the Agreement, the parties hereto, and their respective
affiliates, consent to the exclusive jurisdiction of such court, and waive any
right to challenge jurisdiction or venue in such court with regard to any suit,
action, or proceeding under or in connection with the Agreement. Each party to
this Agreement also hereby waives any right to trial by jury in connection with
any suit, action, or proceeding under or in connection with this Agreement.
Section 19. Notices.
(a) Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the party for whom it is
intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided; provided, that
unless and until some other address be so designated, all notices or
communications by Executive to the Company shall be mailed or delivered to the
Company at its principal executive office, and all notices or communications by
the Company to Executive may be given to Executive personally or may be mailed
to Executive at Executive's last known address, as reflected in the Company's
records with a copy to: Xxxxxxx Xxxxxxxx, Esq., Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxxxx, Xxx Xxxx, XX 00000.
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(b) Any notice so addressed shall be deemed to be given (i) if delivered by
hand, on the date of such delivery, (ii) if mailed by courier or U.S. Post
Office, in any event for next day delivery, on the first business day following
the date of such mailing, and (iii) if mailed by registered or certified mail,
on the third business day after the date of such mailing.
Section 20. Section Headings.
The headings of the sections and subsections of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part thereof or
affect the meaning or interpretation of this Agreement or of any term or
provision hereof.
Section 21. Entire Agreement.
This Agreement, together with any exhibits attached hereto, constitutes the
entire understanding and agreement of the parties hereto regarding the
employment of Executive. This Agreement supersedes all prior negotiations,
discussions, correspondence, communications, understandings, and agreements
between the parties relating to the subject matter of this Agreement, including,
without limitation, the Prior Agreements, but excluding the Deferred
Compensation Agreement which shall survive in accordance with its terms.
Section 22. Survival of Operative Sections.
Upon any termination of Executive's employment, the provisions of Section 8
through Section 23 of this Agreement (together with any related definitions set
forth in Section 1 hereof) shall survive to the extent necessary to give effect
to the provisions thereof.
Section 23. Indemnification.
During the Employment Term and thereafter, the provisions of the
Indemnification Agreement, dated as of September 11, 2006, by and between
Executive and the Company, shall continue in full force and effect. The Company
shall provide Executive with directors' and officers' liability insurance
coverage that is at least as favorable as that provided other officers or
directors of the Company. This Section 24 shall not limit Executive's rights to
indemnification under any other applicable plan, arrangement or agreement of or
with the Company.
Section 24. Parachute Payments.
If an payment or benefit Executive would receive under this Agreement, when
combined with any other payment or benefit Executive receives pursuant to the
termination of Executive's employment with the Company ("Payment") would
constitute in whole or in part an "excess parachute payment" within the meaning
Section 280G of the Code subject to the excise tax imposed by Section 4999 of
the Code (the "Excise Tax"), then such Payment shall be either (i) the full
amount of such Payment or (ii) such lesser amount as would result if the Payment
were reduced until no portion of the Payment was subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal
state and local employments taxes, income taxes, and the Excise Tax, results in
Executive's retention, on an after-tax basis, of the greater net amount.
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Section 25. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same instrument. The execution of this Agreement may be by actual or
facsimile signature.
* * *
[Signatures to appear on the following page.]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
HAMPSHIRE GROUP, LIMITED
/s/ Xxxx Xxxxxxxx
-------------------------
By: Xxxx Xxxxxxxx
Title: Director
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx
[Signature Page to Xxxxxxx X. Xxxxxx Employment Agreement]
EXHIBIT A
GENERAL RELEASE OF CLAIMS
-------------------------
This General Release of Claims (this "Release"), dated as of [_______,
20__], confirms the following understandings and agreements between Hampshire
Group, Limited (the "Company") and Xxxxxxx X. Xxxxxx (hereinafter referred to as
"you" or "your").
In consideration of the promises set forth in this Release, you and the
Company agree as follows:
Section 1. Opportunity for Review and Revocation. You have twenty-one (21)
days to review and consider this Release. Notwithstanding anything contained
herein to the contrary, this Release will not become effective or enforceable
for a period of seven (7) calendar days following the date of its execution,
during which time you may revoke your acceptance of this Release by notifying
Xxxxxxxx Xxxxxxxx, in writing. To be effective, such revocation must be received
by the Company no later than 5:00 p.m. on the seventh calendar day following its
execution. Provided that the Release is executed and you do not revoke it, the
eighth (8th) day following the date on which this Release is executed shall be
its effective date (the "Effective Date"). In the event of your revocation of
this Release pursuant to this Section 1, this Release will be null and void and
of no effect, and the Company will have no obligations hereunder.
Section 2. Release and Waiver of Claims.
(a) As used in this Release, the term "claims" will include all claims,
covenants, warranties, promises, undertakings, actions, suits, causes of action,
obligations, debts, accounts, attorneys' fees, judgments, losses and
liabilities, of whatsoever kind or nature, in law, equity or otherwise.
(b) For and in consideration of the payments and benefits described in
Section 8 of that certain Employment Agreement by and between you and the
Company, dated as of July 30, 2008, and other good and valuable consideration
(the "Consideration"), you, for and on behalf of yourself and your heirs,
administrators, executors and assigns, effective the date hereof, do fully and
forever release, remise and discharge the Company, its direct and indirect
parents, subsidiaries and affiliates, together with their respective officers,
directors, partners, shareholders, employees and agents (collectively, and with
the Company, the "Group") from any and all claims whatsoever up to the date
hereof which you had, may have had, or now have against the Group, for or by
reason of any matter, cause or thing whatsoever, including any claim arising out
of or attributable to your employment or the termination of your employment with
the Company, whether for tort, breach of express or implied employment contract,
intentional infliction of emotional distress, wrongful termination, unjust
dismissal, defamation, libel or slander, or under any federal, state or local
law dealing with discrimination based on age, race, sex, national origin,
handicap, religion, disability or sexual orientation. This release of claims
includes, but is not limited to, all claims arising under the Age Discrimination
in Employment Act ("ADEA"), Title VII of the Civil Rights Act, the Americans
with Disabilities Act, the Civil Rights Act of 1991, the Family Medical Leave
Act, and the Equal Pay Act, each as may be amended from time to time, and all
other federal, state and local laws, the common law and any other purported
restriction on an employer's right to terminate the employment of employees.
1
(c) You acknowledge and agree that as of the Effective Date, you have no
knowledge of any facts or circumstances that give rise or could give rise to any
claims under any of the laws listed in the preceding paragraph.
(d) You specifically release all claims relating to your employment and its
termination under ADEA, a United States federal statute that, among other
things, prohibits discrimination on the basis of age in employment and employee
benefit plans.
(e) Notwithstanding any provision of this Release to the contrary, by
executing this Release, you are not releasing any claims relating to: (i) your
rights with respect to the Consideration, and (ii) any indemnification rights
you may have as a former officer or director of the Company or its subsidiaries
in accordance with the Company's or such subsidiary's bylaws, as the case may
be.
Section 3. Knowing and Voluntary Waiver. You expressly acknowledge and
agree that you:
(a) Are able to read the language, and understand the meaning and effect,
of this Release;
(b) Have no physical or mental impairment of any kind that has interfered
with your ability to read and understand the meaning of this Release or its
terms, and that your not acting under the influence of any medication, drug or
chemical of any type in entering into this Release;
(c) Are specifically agreeing to the terms of the release contained in this
Release because the Company has agreed to pay you the Consideration. The Company
has agreed to provide the Consideration because of your agreement to accept it
in full settlement of all possible claims you might have or ever had, and
because of your execution of this Release;
(d) Understand that, by entering into this Release, you do not waive rights
or claims under ADEA that may arise after the Effective Date;
(e) Had or could have had 21 calendar days in which to review and consider
this Release;
(f) Were advised to consult with your attorney regarding the terms and
effect of this Release; and
(g) Have signed this Release knowingly and voluntarily.
Section 4. No Suit. You represent that you have not filed or permitted to
be filed against the Group, individually or collectively, any complaints or
lawsuits arising out of your employment, or any other matter arising on or prior
to the date hereof.
Section 5. Successors and Assigns. The provisions hereof shall enure to the
benefit of your heirs, executors, administrators, legal personal representatives
and assigns and
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shall be binding upon your heirs, executors, administrators, legal personal
representatives and assigns.
Section 6. Severability. If any provision of this Release shall be held by
any court of competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect. The illegality or unenforceability of
such provision, however, shall have no effect upon and shall not impair the
enforceability of any other provision of this Release.
Section 7. Non-Disparagement. You agree that you will make no disparaging
or defamatory comments regarding the Company in any respect or make any comments
concerning any aspect of your relationship with the Company or the conduct or
events which precipitated your termination of employment from the Company. Your
obligations under this Section 7 shall not apply to disclosures required by
applicable law, regulation or order of a court or governmental agency.
Section 8. Non-Admission. Nothing contained in this Release will be deemed
or construed as an admission of wrongdoing or liability on the part of you or
the Company.
Section 9. Governing Law. This Release shall be governed by and construed
in accordance with Federal law and the laws of the State of New York, applicable
to releases made and to be performed in that State.
IN WITNESS WHEREOF, the parties hereto have executed this Release as of the
date first written above.
Hampshire Group, Limited
-------------------------
By:
Title:
-------------------------
Xxxxxxx X. Xxxxxx
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