CONSULTANT AGREEMENT
AGREEMENT dated as of February 28, 1998 between Donnkenny Apparel, Inc.
(the "Company") and Xxxxxx Xxxxxxxx ("Xxxxxxxx").
W I T N E S S E T H :
WHEREAS, by Employment Agreement dated as of September 5, 1996, Company
agreed to employ Xxxxxxxx on the terms and conditions set forth in such
Employment Agreement, and
WHEREAS, Company and Xxxxxxxx have determined to terminate such
Employment Agreement effective February 28, 1998 in its entirety, and
WHEREAS, Company desires to employ Xxxxxxxx as consultant to perform the
services set forth below in accordance with the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained it is agreed:
1. The Employment Agreement between Company and Xxxxxxxx dated as of
September 5, 1996 is hereby terminated effective as of February 28, 1998. All
sums due thereunder are acknowledged to have been paid, and the parties by
their signatures below, release each other from any obligations thereunder.
Company's pre-existing obligation to indemnify Xxxxxxxx against his proper acts
as an officer and director of Company shall continue in effect and shall not be
diminished as a consequence of entering into this Agreement.
2. Commencing March 1, 1998 and terminating December 31, 1999, Company
hereby employs Xxxxxxxx to consult with it and Xxxxxxxx shall consult with the
officers of Company concerning legal matters arising out of the business
affairs of Company.
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3. Xxxxxxxx shall provide advice with respect to such legal matters and,
at the instance of the officers of Company from time to time, shall negotiate
or supervise negotiation or litigation of legal matters including that certain
class action law suit entitled In Re Donnkenny Apparel, Inc. Securities
Litigation which Xxxxxxxx shall oversee, at the instance of such officers, to
its conclusion (notwithstanding such conclusion might occur beyond December 31,
1999).
4. The particular amount of time devoted by Xxxxxxxx may vary from day to
day or week to week but shall generally be similar to the time devoted by
Xxxxxxxx to duties as general counsel to Company prior to and during the time
the Employment Agreement was in force. Notwithstanding the foregoing: (a) it is
understood that Xxxxxxxx will be serving in a supervisory and consultant's
role; and (b) in the final analysis Xxxxxxxx may utilize his reasonable good
faith judgment as to the amount of time required.
5. Company will pay Xxxxxxxx the sum of $35,000 per month for the month
of March 1998, $30,000 per month for the balance of calendar year 1998, and
$25,000 per month for each calendar month of 1999, payable in advance on first
of the month. Xxxxxxxx will also be paid for extraordinary travel expenses if
travel is required by Company and approved in advance by the Chief Executive
Officer or Chief Operating Officer.
6. Company shall use its best efforts to cause Xxxxxxxx to be nominated
for election as a member of its Board of Directors at the annual meeting of its
shareholders to take place during calendar year 1998. Commencing March 1st,
1998, so long as Xxxxxxxx is serving as a member of the Board of Directors, he
shall be compensated as an outside director.
7. Xxxxxxxx will be entitled to participate in: (a) Company's executive
health insurance plan at the Company's expense for the period ended December
31, 1998, and (b) the Company's Long Term Group Disability Insurance ("LTGDI")
until December 31, 1999, unless
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Xxxxxxxx obtains similar coverage before that date; provided Xxxxxxxx can be
included therein. If not, Company shall pay on Xxxxxxxx' behalf monthly
premiums for Long Term Disability Insurance up to the amount of the current
premium allocable to him for the Company's LTGDI until December 31, 1999.
Company shall also reimburse Xxxxxxxx in the sum of up to $2,000 for each year
hereunder for Term Life Insurance for the period ended December 31, 1999.
8. (a) This Agreement shall terminate in the event Xxxxxxxx shall be
unable for a period of three (3) consecutive months or for periods aggregating
more than 20 weeks in any 52 week period to perform the services provided for
herein. Should Company terminate this Agreement as a result of such inability
to perform, compensation hereunder shall be paid until the end of the sixth
(6th) month after which termination occurs but not for any period after
December 31, 1999. Xxxxxxxx shall be considered unable to perform the services
provided for herein if he is unable to attend to the duties required of him.
Upon completion of the termination payments provided for in this paragraph, all
of Company's obligations to pay compensation under this Agreement shall cease.
(b) If Xxxxxxxx shall die during the term of employment, this
Agreement shall terminate at the end of the month in which Xxxxxxxx' death
takes place and Xxxxxxxx' estate shall continue to receive the compensation
specified herein until the end of such month.
(c) "Cause" shall be defined to mean (i) fraud, dishonesty or
similar malfeasance, (ii) substantial refusal to comply or default in complying
with Company's reasonable directions and/or failure to comply or perform any of
the material terms and/or obligations of this Agreement and such refusal,
default or failure continues for a period of more than ten (10) days after
receipt by Xxxxxxxx of notice from Company setting forth in reasonable detail
the activity by Xxxxxxxx which Company deems to be cause for termination of
this Agreement or (iii)
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Xxxxxxxx' alcohol or drug abuse. In case of Cause, Company may terminate this
Agreement by notice to Xxxxxxxx.
(d) This Agreement shall also terminate should Xxxxxxxx accept
employment other than as an attorney with a firm engaged in the practice of
law. Should Xxxxxxxx obtain employment as an attorney engaged in the practice
of law, the services rendered to Company by Xxxxxxxx or any firm in which he is
an employee, partner or member shall be covered by this Agreement unless
otherwise agreed in advance by the Board of Directors of the Company.
Notwithstanding the foregoing on termination due to the occurrence of the event
set forth in this Section 8(d), Company shall pay Xxxxxxxx the sums set forth
in Section 5 hereof through December 31, 1999 or until such payments reach
$420,000, whichever sooner occurs, provided, however, should Xxxxxxxx violate
Section 11 hereof, notwithstanding any remedy Company may have with respect to
such violation, it shall pay Xxxxxxxx the sums set forth in Section 5 until the
earlier of the date which is six (6) months from his acceptance of such
employment or December 31, 1999; and provided further, however, that should
Xxxxxxxx violate Section 10, 11(b)(ii), 11(c) or 12 hereof, all payments shall
immediately cease.
9. Xxxxxxxx will act as an independent contractor in the performance of
his duties under this Agreement. Accordingly, Xxxxxxxx shall be responsible for
payment of all taxes including Federal, State and local taxes arising out of
Xxxxxxxx' activities relating to this contract, including by way of
illustration but not limitation, Federal and State income tax, Social Security
tax, Unemployment Insurance taxes, and any other taxes or business license fees
as required.
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10. Xxxxxxxx will not at any time, directly or indirectly, disclose
or furnish to any other person, firm or corporation:
(a) any information concerning the methods of conducting or
obtaining business, of manufacturing or advertising products, or of obtaining
customers of Company;
(b) any confidential information acquired by him during the course
of his employment by Company, including, without limiting the generality of the
foregoing, the names of any customers or prospective customers of, or any
person, firm or corporation who or which have or shall have traded or dealt
with, Company (whether such customers have been obtained by Xxxxxxxx or
otherwise); and/or
(c) any confidential information relating to the products, designs,
styles, processes, discoveries, materials, ideas, creations, inventions or
properties of Company.
11. (a) During the term of this Agreement, Xxxxxxxx shall not engage,
directly or indirectly, in any business which is competitive with the business
now or at any time during the term of this Agreement conducted by Company.
(b) During the term hereof and for the period that any payments are
made pursuant hereto, Xxxxxxxx shall not: (i) engage, directly or indirectly,
within the United States of America in any apparel business involving ladies'
or children's wearing apparel which is directly competitive with the business
conducted by Company; or (ii) directly or indirectly, on behalf of himself or
any business in which he may, directly or indirectly, be engaged, recruit,
solicit, induce (or attempt to induce), or have any part in, the diversion of
any of Company's employees or sales representatives from their relationships
with the Company or retain or employ any of Company's employees or sales
representatives.
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(c) Xxxxxxxx shall not at any time, during or after the termination
of this Agreement, engage in any business which uses as its name, in whole or
in part, "Donnkenny" or any other name used by Company during or prior to the
term hereof.
For the purposes of this paragraph 11, Xxxxxxxx will be deemed
directly or indirectly engaged in a business if he participates in such
business as proprietor, partner, joint venturer, stockholder, director,
officer, lender, manager, employee, consultant, advisor or agent or if he
controls such business. Xxxxxxxx shall not for purposes of this paragraph be
deemed a stockholder or lender if he holds less than two (2%) percent of the
outstanding equity or debt of any publicly owned corporation engaged in the
same or similar business to that of Company, provided that Xxxxxxxx shall not
be in a control position with regard to such corporation.
12. As between Xxxxxxxx and Company, all products, designs, styles,
processes, discoveries, materials, ideas, creations, inventions and properties,
whether or not furnished by Xxxxxxxx, created, developed, invented, or used in
connection with Xxxxxxxx' employment hereunder or prior to this Agreement, will
be the sole and absolute property of Company for any and all purposes whatever
in perpetuity, whether or not conceived, discovered and/or developed during
regular working hours. Xxxxxxxx will not have, and will not claim to have,
under this Agreement or otherwise, any right, title or interest of any kind or
nature whatsoever in or to any such products, designs, styles, processes,
discoveries, materials, ideas, creations, inventions and properties.
13. Notices: Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by overnight
nationally recognized courier service or by hand, as follows:
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As to Xxxxxxxx: Xxxxxx Xxxxxxxx, Esq.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
As to Company: Donnkenny Apparel, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Appelle, Chairman
and Chief Executive Officer
with a copy to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxx, Esq.
or to such other address as either party hereto may designate by notice given
in accordance with this Agreement.
14. A party hereto may not assign this Agreement or any rights or
obligations hereunder without the consent of the other party hereto; provided,
however, that upon the sale or transfer of all or substantially all of the
assets of Company, or upon the merger by Company into, or the combination with,
another corporation, this Agreement will inure to the benefit of and be binding
upon the person, firm or corporation purchasing such assets, or the corporation
surviving such merger or consolidation, as the case may be. The provisions of
this Agreement where applicable are binding upon the heirs of Xxxxxxxx and upon
the successors and assigns of the parties hereto.
15. Waiver by either party of a breach of any provision of this Agreement
by the other shall not operate or be construed as a waiver of any subsequent
breach by such other party.
16. As used in this Agreement the term "Company" shall also include
any subsidiary or affiliate of Company.
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17. Any controversy arising out of or relating to this Agreement,
including any modification or amendment thereof, shall be resolved by
arbitration in the City of New York, pursuant to the rules then obtaining of
the American Arbitration Association. The arbitrators sitting in any
controversy shall have no power to alter or modify any express provision of
this Agreement, or make any award which by its terms effects such alteration or
modification. The parties consent to the application of the New York or Federal
Arbitration Statutes and to the jurisdiction of the Supreme Court of the State
of New York, and of the United States District Court of the Southern District
of New York, for judgment on an award and for all other purposes in connection
with said arbitration and further consent that any notice, process or notice of
motion or other application to either of said Courts or Judges thereof, or of
any notice in connection with any arbitration hereunder, may be served in or
out of the State or Southern District of New York by certified or registered
mail, return receipt requested, or by personal service, provided a reasonable
time for appearance is allowed, or in such manner as may be permitted under the
rules of the American Arbitration Association or of either of said Courts.
Judgment upon the award rendered may be entered by any Court having
jurisdiction. Any provisional remedy which, but for this provision to arbitrate
disputes, would be available at law, shall be available to the parties hereto
pending the final award of the arbitrators. The parties hereto recognize that
irreparable damage may result to the Company and its business and properties if
Xxxxxxxx fails or refuses to perform his obligations under this Agreement and
that the remedy at law for any such failure or refusal may be inadequate.
Accordingly, notwithstanding any other provisions hereof to arbitrate disputes
arising hereunder, Company has not waived its rights to seek any provisional
remedies (including, without limitation, injunctive relief) and damages. The
institution of any arbitration proceedings shall not bar injunctive relief,
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nor shall any arbitration proceedings bar injunctive relief, or any other
provisional remedy, pending the final award of the arbitrators. Payments due to
Xxxxxxxx hereunder shall continue during the pendency of any such arbitration
proceeding but shall be adjusted retroactively if necessary and repaid by
Xxxxxxxx should the arbitration determination require same; the continuation of
such payments being agreed to as an accommodation to Xxxxxxxx pending the
conclusion of the arbitration proceeding.
18. This instrument contains the entire agreement of the parties as to
the subject matter hereof and supersedes and replaces all prior oral or written
agreements between the parties. It may not be changed orally, but only by an
amendment to this Agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
19. This Agreement shall be construed in accordance with the laws of
New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
DONNKENNY APPAREL, INC.
By: /s/ Xxxxxx Appelle
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Xxxxxx Appelle, Chairman and
Chief Executive Officer
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
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