Exhibit 10.5
EMPLOYMENT AGREEMENT FOR XXXXXX X. XXXXXXXXX
EMPLOYMENT AGREEMENT, dated as of March 15, 1996, among
CHIC BY H.I.S, INC., a Delaware corporation ("Holding"), XXXXX X. XXXXXX
COMPANY, INC., a Delaware corporation and a wholly owned subsidiary of Holding
(the "Corporation"), and XXXXXX X. XXXXXXXXX (the "Executive").
The Executive has heretofore been employed by the Corporation, and
the Executive and the Corporation desire to continue such employment, upon the
terms and conditions set forth herein.
Accordingly, the parties agree as follows:
1. EMPLOYMENT AND ACCEPTANCE.
The Corporation hereby employs the Executive and the Executive
hereby accepts employment from the Corporation for the Term (as hereinafter
defined). As of the opening of business on the Effective Date (as defined in Sec
tion 4), this Agreement supersedes all agreements, written or oral, between the
Executive and the Corporation and Holding relating to terms of employment.
2. DUTIES AND AUTHORITY.
2.1 DUTIES. During the Term, the Executive shall devote his
full time and energies to the business and affairs of the Corporation. The
Executive agrees to use his best efforts, skill and abilities to promote the
Corporation's interests; to serve as the Chief Executive Officer of the
Corporation and to perform all the duties necessary or appropriate for the
management of the Corporation's business and also such duties (consistent with
his status as set forth in sections 2.2 and 2.3) as may be assigned to him by
the board of directors of the Corporation (the "Board of Directors") and the
board of directors of Holding.
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2.2 AUTHORITY. The Executive shall be the Chief Executive
Officer of the Corporation, subject to the supervision of the Board of Directors
and the board of directors of Holding (which supervision, subject to the
applicable provisions of law governing the obligations of boards of directors,
shall be such as is customarily exercised over a chief executive officer of a
corporation). During the Term, the Corporation shall not confer on any other
officer or employee authority, responsibility or powers superior or equal to the
authority, responsibility or powers vested in Executive hereunder.
2.3 MEMBER OF THE BOARD. During the Term, the Executive
shall be appointed or elected to serve as a member of the Board of Directors.
3. LOCATION.
The duties to be performed by the Executive hereunder shall be
performed primarily at the principal office of the Corporation, currently
located in the City of New York, subject to reasonable travel requirements on
behalf of the Corporation.
4. TERM OF EMPLOYMENT.
The initial term of the Executive's employment under this Agreement
shall commence on the date hereof (the "Effective Date") and shall end on the
fifth anniversary of the Effective Date, unless sooner terminated pursuant to
Section 6; PROVIDED, HOWEVER, that such initial term shall be extended
automatically for successive one-year periods unless either party gives the
other party at least 90 days' prior written notice of its or his intent not to
allow such extension to become effective (such initial term and automatic
extensions thereof, through the expiration of the last
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thereof or the date of any earlier termination thereof pursuant to Section 6, is
referred to herein as the "Term"). As used herein, the term "Scheduled
Termination Date" shall refer to the date the Term would have ended had there
been no earlier termination pursuant to Section 6.
5. COMPENSATION, EXPENSES AND BENEFITS.
5.1 SALARY. During the Term, the Corporation shall pay the
Executive a salary of $393,750 per year (the "Base Salary"), payable in equal
weekly installments, less such deductions or amounts to be withheld as shall be
required by applicable law and regulations.
5.2 INCREASE. The Base Salary may be increased on each
February 1 of the Term, beginning February 1, 1997, at the discretion of the
board of directors of Holding.
5.3 AUTOMOBILE AND EXPENSES. The Corporation shall provide the
Executive with an automobile and such other means of transportation as is
reasonable for fulfilling his responsibilities and shall pay or reimburse the
Executive for all transportation, hotel and living expenses incurred by the
Executive on business trips outside the New York City metropolitan area, and for
all other business and entertainment expenses reasonably incurred or paid by him
during the Term in the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as the Corporation may require.
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5.4 VACATION. The Executive shall be entitled to reasonable
annual periods of vacation (not less than an aggregate of four weeks in any
calendar year) with full pay and allowances.
5.5 FRINGE BENEFITS. In addition to the compensation and
expenses to be paid under this Section 5, the Executive shall be entitled to all
rights and benefits for which he shall be eligible under any participation or
extra compensation plan, pension, life insurance, health insurance,
hospitalization and other forms of insurance, as well as all other so-called
"fringe" benefits which the Corporation provides for its executives
(collectively, the "Fringe Benefits"). The Corporation agrees that any
significant Fringe Benefits accorded or granted to the Executive shall not be
less than the Fringe Benefits accorded or granted to any other of the
Corporation's employees.
6. TERMINATION.
The Corporation may terminate the Executive's employment hereunder
(i) for cause (as defined in Section 6.1) or (ii) if the Executive becomes
permanently and seriously disabled, either physically or mentally (pursuant to
Section 6.2).
6.1 TERMINATION FOR CAUSE. If the Executive shall be lawfully
discharged for cause during the Term, the Corporation's obligation to pay
compensation or other amounts payable hereunder to or for the benefit of the
Executive shall terminate on the date of such discharge. Such termination may
take place only upon the initiative of the board of directors of Holding. As
used herein the term "for cause" shall be limited to the Executive's malfeasance
and shall mean the Executive's (i) willful, material and bad faith failure to
perform his duties
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hereunder after written notice by the board of directors of Holding specifying
in reasonably detailed terms the alleged failure to follow such board of
directors' written, lawful directives and including in said notice the opinion
of the board of directors of Holding that there has been such failure, provided
that such failure shall continue for at least 30 days following such notice;
(ii) gross and willful misconduct that is materially and demonstrably injurious
to the Corporation or (iii) conviction of a felony after affirmance of such
conviction in any final appeal thereof. The term "for cause" shall not include a
bona fide disagreement over policy matters so long as the Executive does not
willfully and materially violate specific, lawful written directions from the
Chief Executive Officer with respect to policies adopted by the Executive.
6.2 PERMANENT DISABILITY. If during the Term the Executive
shall become permanently and seriously disabled, either physically or mentally,
so that he is absent from his office due to such disability and otherwise unable
substantially to perform his services hereunder for periods aggregating 120
business days during any twelve month period, the Corporation may, upon 30 days'
written notice to the Executive, given after the day on which such periods of
disability shall have equaled such aggregate, terminate the Executive's
employment at the discretion of the board of directors of Holding. Such
termination shall not take effect if during such 30-day period the Executive has
demonstrated that he has recovered from such permanent and serious disability by
returning to substantial performance of his duties hereunder. Notwithstanding
such termination, (i) the Corporation shall continue to pay the Executive his
full salary up to and including the date of such termination and (ii) thereafter
and until the later of the Scheduled Termination Date or the date that is
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36 months after the effective date of the Executive's termination for
disability, but in no event later than the date the Executive has reached age 65
(the "Disability Pay Termination Date"), the Corporation shall pay the Executive
fifty percent of the Executive's Base Salary as in effect on the date of such
termination, as disability pay, less the sum of (a) any other disability
payments received by the Executive from the Corporation or from insurance
provided by the Corporation and (b) two-thirds of any earned income received by
the Executive from full-time executive employment commencing after the
Executive's recovery from such disability. After the date of the termination of
the Executive's employment under this Section 6.2, the Executive shall be
entitled to continue to receive the Fringe Benefits referred to in Section 5.5
until the Disability Pay Termination Date.
6.3 DEATH. In the event of the Executive's death during the
Term, the Executive's employment under this Agreement shall terminate and the
Executive's surviving spouse or, if there is no surviving spouse, the
Executive's estate, shall be entitled to receive the compensation provided for
hereunder to the last day of the sixth full month after which the Executive's
death occurs.
7. COVENANT NOT TO COMPETE; CONFIDENTIALITY; REMEDIES.
7.1 COVENANT NOT TO COMPETE. The Executive recognizes that
the services to be performed by the Executive hereunder are special, unique and
extraordinary. Accordingly, for all purposes hereunder or in respect hereof, the
Executive agrees that during the Term, and in the event that the Executive's
employment is terminated for cause pursuant to Section 6.1 or the Executive
resigns prior to the expiration of the Term, then for one year after the
effective date of such
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termination or resignation, the Executive will not, directly or indirectly, as
an officer, director, stockholder, partner, associate, employee, consultant,
owner, agent, creditor, co-venturer or otherwise, become or be interested in or
be associated with, nor shall he accept any gratuity from, any other
corporation, firm or business engaged, in the United States, in a business which
is materially competitive with any material business operated by the Corporation
on the Effective Date. The Executive's ownership, directly or indirectly, of not
more than three percent of the issued and outstanding stock (or debt obligations
aggregating not more than $250,000) of any corporation the shares of which are
traded on a national securities exchange or regularly traded in the
over-the-counter market shall not be deemed to be a violation of the provisions
of this Section 7.1. Neither will it constitute a violation of this Section 7.1
for the Executive to own, directly or indirectly, securities of any entity not
more than fifteen percent of whose revenues are derived from businesses that
compete with businesses of the Corporation.
7.2 CONFIDENTIALITY. The Executive shall not divulge to anyone
(other than to directors or employees of the Corporation or its affiliates or in
connection with the proper business and affairs of the Corporation or any of its
affiliates), either during or at any time after the termination of his
employment, any information constituting a trade secret that was acquired by him
during his employment by the Corporation concerning the Corporation's and its
affiliates' customer lists or processes or any other of its trade secrets and
which thereafter does not become publicly known other than by the Executive's
unauthorized disclosure thereof. The Executive acknowledges that any such
information constituting a trade
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secret is of a confidential and secret character and of great value to the
Corporation and its affiliates.
7.3 REMEDIES. The Corporation shall be entitled, in addition
to any other right and remedy it may have at law or at equity, to an injunction
enjoining or restraining the Executive from any material violation or threatened
violation of the covenants contained in Sections 7.1 and 7.2, and the Executive
hereby consents to the issuance of such injunction; PROVIDED, HOWEVER, the
foregoing shall not prevent the Executive from contesting the issuance of any
such injunction on the ground that no violation or threatened violation of
Sections 7.1 and 7.2 has occurred. If any of the restrictions contained in this
Section 7 shall be deemed to be unenforceable by reason of the extent, duration
or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Section 7 shall
then be enforceable in the manner contemplated hereby. The term "affiliate" as
used herein shall mean any corporation, partnership, or other entity or
enterprise which, directly or indirectly, controls, is controlled by, or is
under common control with, another entity.
8. NOTICES.
Any notice or other communication required to or which may be given
to any party hereunder shall be in writing and shall be deemed effective if
delivered personally or if mailed by registered or certified mail, postage
prepaid, addressed to such party as follows (the third business day following
the date of mailing of any such notice is deemed the date of delivery thereof):
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To the Executive:
Xxxxxx X. Xxxxxxxxx
00 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
To the Corporation:
Xxxxx X. Xxxxxx Company, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Board of Directors
To Holding:
Chic by H.I.S, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Board of Directors
With copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Any party may change the persons and addresses to which notices or
other communications are to be sent by giving written notice of such change to
the other party in the manner provided herein for giving notice.
9. MISCELLANEOUS.
9.1 NO ASSIGNMENT. This Agreement is personal in its nature
and none of the parties hereto shall assign or transfer this Agreement or any
rights or obligations hereunder, except that the Corporation may assign this
Agreement and its rights and obligations hereunder in connection with any
transfer, sale or other disposition of all or substantially all of its assets,
in which event this Agreement shall
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be binding upon and inure to the benefit of the successor entity of the
Corporation and such successor entity shall discharge and perform all the
obligations of the Corporation hereunder.
9.2 CHOICE OF LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE.
9.3 NO WAIVER. If any party should waive any breach of any
provision of this Agreement, such party will not thereby be deemed to have
waived any preceding or succeeding breach of the same provision or any breach of
any other provision of this Agreement.
9.4 AMENDMENTS. This instrument is the entire agreement of the
parties with respect to the subject matter hereof and may not be amended, supple
mented, canceled or discharged except by a written instrument executed by the
parties hereto. The parties do not intend to confer any benefit hereunder on any
third person, except as otherwise provided in Section 6.3.
9.5 HEADINGS. Section headings are inserted herein for
convenience only and do not constitute a part, and shall not affect the meaning
or interpretation, of this Agreement.
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9.6 COUNTERPARTS. This Agreement may be executed in one 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
XXXXX X. XXXXXX COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chief Executive Officer
CHIC BY H.I.S, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
