1
Exhibit 10.60
SERVICES AGREEMENT
This Agreement (the "Agreement") is made as of the fifth day of
December, 2000 by and among: (i) Meridian Ventures, LLC, a Nevada limited
liability company controlled by Xxxxxx X. Xxxxx ("Meridian"), and Xxxxxx X.
Xxxxx ("Xxxxx"), jointly and severally; and (ii) Hanover Direct, Inc.
("Company"), a Delaware corporation.
1. Provision of Services. Meridian shall provide for the
benefit of the Company the services of Xxxxx and the services of two
(or more, at Meridian's discretion) additional consultants (the
"Consultants") who shall provide services equivalent to those which
would be provided by two full-time consultants. In connection
therewith, Xxxxx shall serve as the President and Chief Executive
Officer (the "President/CEO") and as a member of the Board of Directors
and its Executive Committee (the "Executive Committee").
2. Responsibilities. The President/CEO shall act and serve
during the term of this Agreement as the President and Chief Executive
Officer of the Company and shall report to the Company's Board of
Directors. The employment responsibilities of the President/CEO will
include those normally held by the president and chief executive
officer of a corporation of a similar size and nature to the Company.
The President/CEO shall devote his full-time efforts (which shall mean
an average of 50 hours per work week, excluding reasonable vacation,
personal, sick time or de minimus non-conflicting time for Meridian) in
connection with his role as President, Chief Executive Office and
member of the Executive Committee. All employees and officers shall
report directly or indirectly to the President/CEO.
3. Term. Subject to paragraph 6, the term of this Agreement
(the "Agreement Term") and the term for services of Xxxxx shall
commence as of December 5, 2000 and shall terminate on December 4,
2001. The term for the services of the Consultants shall commence on
December 5, 2000 and shall terminate on June 4, 2001, or upon any
earlier termination of the Agreement Term. Such terms shall be
renewable by mutual written agreement of the parties.
4. Compensation. (a) In consideration for providing the
services of Xxxxx as President/CEO and the services of the Consultants,
during the Agreement Term, Meridian shall receive, in addition to the
other consideration provided in this Agreement, compensation at the
rate of $75,000 per month for services of Xxxxx and, during the first
six-months (6) of the Agreement Term, an additional $75,000 per month
for the aggregate services of the Consultants payable in advance during
the first week of each month (the "Base Fee").
2
(b) The compensation payable to Meridian under this
Agreement is in consideration for the services of
Xxxxx and services of the Consultants. To the extent
permitted by applicable law, the Company shall not be
obligated to provide Xxxxx or any Consultant (and
Meridian, Xxxxx and Meridian on behalf of each other
Meridian employee serving hereunder as a Consultant
specifically decline) any employee benefits (for
example, health, 401K, pension, or other benefits
provided by the Company to its employees, etc.) under
this Agreement. Notwithstanding the foregoing, the
Company will allow Xxxxx during the Agreement Term to
avail himself of any Company's employee discount
offered to other employees generally.
(c) In addition to the payments required by paragraph
4(a), during the Agreement Term the Company shall pay
Meridian a flat fee of $30,000 per month for the
first six-months (6) of services and $15,000 per
month for the remaining six-months (6) of services,
which represents 20% of the compensation in paragraph
(4)(a) and is deemed to cover Meridian over-head
(including legal and accounting), health care costs,
payroll costs, and other expenses (the "Flat Fee").
If, notwithstanding paragraph 4(b), applicable law
requires the Company to provide Xxxxx or any
Consultant with any employee benefits (other than the
Company's employee discount given Xxxxx), the value
of such benefits shall be offset against the Flat
Fee.
(d) The Company shall reimburse Meridian for the
reasonable out-of-pocket expenses of the
President/CEO and Consultants (such as travel, meals,
communications and lodging) which are incurred during
the Agreement Term on behalf of the Company on
appropriate business. Meridian shall submit invoices
and documentation for such reimbursable expenses on a
monthly basis, and the Company shall process payment
of the same upon receipt in accordance with its
customary procedures.
(e) The Company shall provide a personal secretary to be
interviewed and selected by Xxxxx to assist Xxxxx in
the performance of duties as President/CEO during the
Agreement Term. The secretary shall be employed by
the Company at its cost.
(f) The Company shall promptly reimburse Meridian and
Xxxxx for their reasonable legal fees in the event
that either of them shall consult with their counsel
during the Agreement Term in connection with their
fiduciary responsibilities to the Company under the
Agreement, provided that such fees shall not without
the prior written approval of the Executive Committee
(which shall not be unreasonably withheld) exceed
$20,000 (except that such $20,000 cap shall not limit
the fees payable pursuant to paragraph 8 hereof).
2
3
(g) The Consultants shall have the right to accept
another engagement during the Agreement Term,
provided such engagement does not lessen the ability
of Meridian and Xxxxx to perform their services
hereunder or conflict with the obligations of
Meridian and Xxxxx hereunder or present a conflict of
interest with respect to the Company. Neither
paragraph 2 nor any of the preceding subparagraphs of
this paragraph 4 will be affected by this right given
to the Consultants.
5. Stock Options. No later than January 5, 2001, the Company
will xxxxx Xxxxx and the Consultants stock options for an aggregate
four million (4,000,000) shares of the common stock of the Company
("Shares"). Each option shall have an exercise price of $0.25 per
Share. Allocation of the options shall be as follows: Xxxxxx X. Xxxxx
(options for 2,700,000 Shares), Xxxx Xxx (options for 500,000 Shares),
Xxxx X. Xxxxx (options for 500,000 Shares), Xxxx X. Xxxxx (options for
200,000 Shares) and Xxxxx Schweinfurt (options for 100,000 Shares). All
options shall terminate upon any termination of the Agreement pursuant
to paragraph 6(a)(i) or 6(a)(iv). All outstanding options shall vest
and become exercisable upon any termination of the Agreement pursuant
to paragraph 6(a)(ii), 6(a)(iii), 6(a)(v) or 6(a)(vi). When options
vest and become exercisable upon a termination of the Agreement, they
shall remain exercisable until their termination on the second
anniversary of the termination of the Agreement (or their earlier
exercise). In the event of a vesting resulting from a termination of
the Agreement pursuant to paragraph 6(a)(v), such vesting shall take
place sufficiently in advance of such termination (but subject to its
occurrence) to permit each optionee to take all steps reasonably
necessary to exercise his options and to deal with the Shares purchased
under the options so that those Shares may be treated in the same
manner in connection with the transaction described in paragraph
6(a)(v) as the Shares of other shareholders.
6. Termination. (a) The Agreement, the Agreement Term, the
term for services of Xxxxx and the engagement of Meridian and Xxxxx
hereunder will terminate upon the first to occur of the following: (i)
the tenth day after written notice by the Company to Meridian and Xxxxx
with respect to any material breach by Meridian or Xxxxx of the terms
of this Agreement or Willful Misconduct (as hereinafter defined)
committed by Meridian or Xxxxx; (ii) the tenth day after written notice
by Meridian and Xxxxx to Company that the Company is in material breach
of this Agreement; (iii) December 4, 2001; (iv) the death or permanent
disability of Xxxxx; (v) the first day after the acquisition of the
Company (whether by merger or the acquisition of all of its outstanding
capital stock) or the tenth day after the sale of at least two-thirds
(2/3) of the assets of each of the Company's two primary businesses;
and (vi) or the day the Company terminates the engagement of Meridian
and Xxxxx when there has been no Willful Misconduct or material breach
of the Agreement by either Meridian or Xxxxx.
(b) The parties agree that Meridian and Xxxxx will have
been unable to pursue alternative, profitable
opportunities in order to take on this engagement,
3
4
that Meridian and Xxxxx would suffer substantial
financial damage if either party were to exercise its
rights of termination hereunder, and that the amount
of damages to Meridian and Xxxxx would be difficult,
if not impossible, to calculate accurately.
Accordingly, the parties agree that if pursuant to
this paragraph 6, Meridian, Xxxxx or the Company
shall at any time cause this Agreement to terminate
or the Agreement shall otherwise terminate, then the
Company shall pay Meridian an amount as set forth
below. In the event of the termination of this
Agreement as provided in paragraph 6(a), Meridian
shall receive hereunder the Base Fee and the Flat Fee
through the end of the month in which the date of
termination has occurred, plus a termination payment
as follows:
(A) If the termination is pursuant to
paragraph 6(a)(i), 6(a)(iii) or
6(a)(iv) above, no amount shall be due
and owing to Meridian;
(B) If the termination is pursuant to
paragraph 6(a)(ii) or 6(a)(vi),
Meridian shall be entitled to receive
a lump sum payment equal to the
greater of (i) $540,000 or (ii) the
aggregate amount of Base Fees and Flat
Fees to which it would have otherwise
been entitled through the end of the
Agreement Term. If the termination is
pursuant to paragraph 6(a)(v) and the
amount realized in the transaction
described therein equals or exceeds
$0.50 per Share (or the equivalent of
$0.50 per Share), Meridian shall be
entitled to receive a lump sum payment
equal to the aggregate amount of Base
Fees and Flat Fees to which it would
have otherwise been entitled through
the end of the Agreement Term. If the
termination is pursuant to paragraph
6(a)(v) and the amount realized in the
transaction described therein is less
than $0.50 per Share (or the
equivalent of $0.50 per Share),
Meridian shall be entitled to receive
a lump sum payment equal to the
greater of the aggregate amount of
Base Fees and Flat Fees to which it
would have otherwise been entitled
through the end of the Agreement Term
or the sum of $1,000,000.
(c) The parties agree that the amounts established
hereunder are liquidated damages reasonable under the
terms and circumstances of this Agreement (but
excluding amounts due under paragraph 8 which shall
continue to survive the termination of this
Agreement), the payment of which shall fully satisfy
and discharge any obligation of the Company to pay
(i) any further compensation under paragraph 4 and
(ii) any compensation for lost
4
5
opportunity costs incurred by Meridian or Xxxxx as a
result of either party entering into this Agreement.
(d) In addition, upon termination of this Agreement for
any reason, the Company shall reimburse Meridian in
accordance with paragraph 4(d) for all reasonable
reimbursable expenses incurred by Meridian to the
time of termination.
(e) Any amounts payable to Meridian pursuant to this
paragraph 6 shall be paid in a lump sum within five
business days after the termination date of this
Agreement; provided, however, that, if the party
receiving a notice pursuant to paragraph 6(a)(i) or
6(a)(ii) notifies the other party that a dispute
exists concerning the termination, then, for purposes
of paragraphs 5 and 6, the deemed date of termination
of the Agreement shall be the date on which the
dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment,
order or decree of an arbitrator or court of
competent jurisdiction (which, in either case, is not
appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been
perfected); provided further that the date of
termination of the Agreement shall be extended by a
notice of dispute only if such notice is given in
good faith and the party giving such notice pursues
the resolution of such dispute with reasonable
diligence. To the extent permitted by applicable law,
any such dispute and any other controversy arising
under or in connection with this Agreement, except
(at the Company's election) a dispute or controversy
under paragraph 9, shall be settled exclusively by
binding arbitration in New York, New York, in
accordance with the Employment Dispute Resolution
Rules then in effect with the American Arbitration
Association. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
7. Insurance. The Company shall maintain in force during the
term of this Agreement, directors' and officers' liability insurance
("D&O Insurance") with limits not less than five million dollars
($5,000,000) on terms and conditions currently provided for under the
Company's existing insurance policy, and shall use reasonable efforts
to name Xxxxx as an insured thereunder within ten (10) days after this
Agreement has been executed by the parties and approved by the Company.
A copy of the policy shall be furnished to Xxxxx for his information as
soon as the policy can, with reasonable efforts, be obtained from the
insurer.
8. Indemnity. If Meridian, Xxxxx or any employee of Meridian
who serves as Consultant to the Company ("Indemnitee") is threatened
with or made a party to, or called as a witness or deposed or
subpoenaed in, any action, suit or other legal, administrative or
governmental proceeding or other legal process by reason that
Indemnitee is or was deemed a consultant, officer, employee or other
agent of the
5
6
Company or any of its affiliates, the Company shall defend, indemnify
and hold Indemnitee harmless to the maximum extent allowed by
applicable law and the Company's Certificate of Incorporation and
By-Laws against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, disbursements and
expenses, including counsel fees reasonably incurred by Indemnitee in
connection therewith, to the extent the same are not paid under the D&O
Insurance ("Indemnified Liability" or "Indemnified Liabilities");
provided however, that Indemnitee shall not be entitled to
indemnification hereunder to the extent any such liability, obligation,
loss, damage, penalty, action, judgment, suit, claim, disbursement or
expense results from the gross negligence, willful misconduct or
criminal conviction ("Willful Misconduct") of Indemnitee as determined
by a court of competent jurisdiction. Indemnitee represents and
warrants that it or he has not received notice of any claim which might
constitute an Indemnified Liability hereunder. The Company represents
that it has not received any notice of any claim against Indemnitee
that would constitute an Indemnified Liability hereunder. Payments
under this indemnity in respect of indemnified settlements or judgments
shall be paid at the time of final settlement or final judgment (from
which no appeal may be taken), or, in respect of counsel fees or costs
of defense, which shall be limited to one counsel for all Indemnitees,
shall be paid at the time such fees or costs are incurred.
With the prior written consent of the Company, which shall not
be unreasonably withheld, Indemnitee shall have the right to pay or
compromise and adjust all Indemnified Liabilities not manifestly
without merit. Company shall have the right to pay or compromise
without Indemnitee's consent Indemnified Liabilities other than those
which arise from or are related to any criminal action, suit or
proceeding. Notwithstanding anything to the contrary contained in the
preceding sentence, Indemnitee's consent shall be required for any
settlement which contains a stipulation to, or admission or
acknowledgement of, any liability or wrongdoing on the part of
Indemnitee.
This paragraph 8 shall survive the termination of this
Agreement.
9. Confidentiality. Meridian and Xxxxx shall at all times both
during its and his engagement hereunder and after termination thereof
regard and preserve as confidential all trade secrets and other
confidential information pertaining to the business of the Company that
have been or may be obtained by Meridian or Xxxxx by reason of the
performance of the terms of this Agreement. Meridian and Xxxxx agree
that all documents, reports, manuals, drawings, designs, tools,
equipment, plans, proposals, marketing and sales plans, customer lists,
or materials made by the Company or coming into Meridian's or Xxxxx'x
possession by reason of its or his performance under this Agreement are
the property of the Company and shall not be used by Meridian or Xxxxx
in any way prohibited by this Agreement. Except as expressly provided
herein, during the Agreement Term and after termination thereof,
Meridian and/or Xxxxx shall not deliver,
6
7
reproduce, publish or in any way allow, after due care, information
describing any trade secrets or other confidential documents or things
to be delivered or used by any third party without specific direction
or written consent of the Company or in response to lawful process.
Immediately upon termination of this Agreement, Meridian and Xxxxx
shall promptly deliver to the Company all documents, tools, equipment,
drawings, blueprints, manuals, material and significant or confidential
letters and notes, reports, price lists, customer lists and copies
thereof, and all other materials relating to the Company's business and
which are in the possession of or under the control of Meridian or
Xxxxx. Confidential information as defined above shall exclude
information or materials that become generally available to the public
other than through disclosure by Meridian, Xxxxx or any employee of
Meridian in violation of this Agreement.
This paragraph 9 shall survive the termination of the
Agreement.
10. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the internal laws of the state of New
Jersey.
11. Modification. This Agreement may only be modified by
mutual agreement.
12. Assignment. This Agreement is a personal service contract
and may not be assigned by either party.
13. Notices. All notices required or permitted by this
Agreement shall be in writing and shall be personally delivered or
faxed to the parties at their addresses set forth below or to such
different addresses as such parties shall direct by notice sent in
accordance with this paragraph.
If to Xxxxxx X. Xxxxx or Meridian Ventures, LLC:
00 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Tel.: 000-000-0000
Fax: 000-000-0000
with copies to:
Xxxx X. Xxxxxxx, Esq.
Rosenfeld, Wolff, Xxxxxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
If to Company:
7
8
Xxxx Xxxxxxxx
Chairman of the Board, Hanover Direct, Inc.
Richemont International Limited
00 Xxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxx Xxxxxxx
Tel.: 000000000000000
Fax: 000000000000000
8
9
with copies to:
General Counsel
Hanover Direct, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
and
Xxxxxx X. Xxxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Tel.: 000-000-0000
Fax: 000-000-0000
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15. Attorneys' Fees. Xxxxx shall be entitled to reimbursement
for reasonable attorneys' fees and disbursements incurred in connection
with the review of, and advice with respect to the execution of, this
Agreement; provided, however, that the aggregate amount of such
reimbursement shall not exceed $5,000. If any legal action or
proceeding or arbitration proceeding is brought either for the
enforcement of this Agreement or because of an alleged dispute, breach,
default, or material misrepresentation in connection with any of the
provisions of the Agreement, the successful or prevailing party shall
be entitled, in addition to any other relief to which it may be
entitled, to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding including fees and costs incurred
on appeal and in collecting any judgment, and the arbitrator or court
shall so provide in its judgment.
16. Consent to Jurisdiction. Subject to their agreement to
binding arbitration in paragraph 6(e), the Company, Meridian and Xxxxx
each hereby irrevocably consent to the jurisdiction of the courts of
the State of New Jersey for all purposes in connection with any legal
action or proceeding which arises out of or relates to this Agreement
and agree that any legal action or proceeding instituted under this
Agreement shall be brought only
9
10
in such courts and that such courts shall have jurisdiction as provided
above, except that the Company shall be entitled to enforce its rights
under paragraph 9 in any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
HANOVER DIRECT, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
MERIDIAN VENTURES, LLC
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, President
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, as an individual
10
