Exhibit 10.10
Employment Agreement
EMPLOYMENT AGREEMENT ("Agreement"), dated as of March 1, 2000, between
Candie's Inc., a Delaware corporation (the "Company"), with principal executive
offices at 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 and Xxxx Xxxxxx
XxXxxx (the "Executive"), residing at 00 Xxxxx Xxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxx 00000.
Witnesseth
WHEREAS, the Company has determined that it desires to employ Executive as
President of Wholesale.
WHEREAS, the Company and Executive desire to enter into an agreement
relating to the employment of Executive by the Company;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ Executive as of the commencement of the
Employment Term (as hereinafter defined), and Executive hereby agrees to accept
employment with the Company and agrees to serve, upon the terms and conditions
herein contained, as President of Wholesale and shall have the duties and
responsibilities normally inherent in such capacity in corporations of similar
size and character. Executive shall report to the Chief Executive Officer of the
Company.
The term of employment under this Agreement shall commence on March 15,
2000 and, subject to the terms hereof shall terminate on January 31, 2003 (such
term of employment is referred to hereinafter as the "Employment Term").
Throughout the period of his employment hereunder, Executive shall devote
substantially all his business time, and his best efforts to the business and
affairs of the Company. The Company acknowledges that the Executive owns
investment real estate holdings, which do not conflict with his duties with the
Company.
The duties and services to be performed by Executive hereunder shall be
rendered in the Manhattan and/or Westchester County, New York Metropolitan Area,
except for reasonable travel on the Company's business incident to the
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performance of Executive's duties. Executive shall not be required to perform
any duties or services that would require him to relocate his current residence.
2. SALARY
During the Employment term, Executive shall be entitled to receive a base
salary at a rate of $200,000 for the period commencing March 1, 2000 and ending
March 15, 2000, $225,000 thereafter for a term expiring January 31, 2001,
$275,000 for the 12 months ending January 31, 2002 and $325,000 for the 12
months ending January 31, 2003, payable in bi-weekly installments in accordance
with the Company's payroll practices.
3. BONUS AND STOCK OPTIONS
Executive shall receive an annual bonus of 1% of the Company's income
before income taxes (but in no event less than $25,000 in respect of the fiscal
year ending January 31, 2001). The bonus shall be paid within 30 days of
company's filing of its Form 10-K with the Securities and Exchange Commission,
or 120 days from fiscal year-end, whichever occurs first.
In consideration of Executive entering into this Agreement, the Company
hereby grants to Executive, and Executive hereby accepts, an option to purchase
100,000 shares (the "2000 Option") of the Company's common stock at a price per
share equal to the fair market value as of the date hereof. This option shall
vest such that 33 1/3% of the shares subject to option may be exercised
immediately, 66 2/3% of the shares subject to option may be exercised on the
first anniversary of the Agreement, and upon the second anniversary of this
Agreement, the option may be exercised as to all optioned shares not previously
exercised.
The Company has previously granted options to Executive which, together
with shares subject to 2000 Option, constitute options in the aggregate in
respect of 250,000 shares of the Company's common stock (the "Option Shares").
On or before September 1, 2000, the Company shall file with the Securities and
Exchange Commission a Registration Statement on Form S-8, or such other
comparable form, as necessary to register the Option Shares under the Securities
Act of 1933, as amended, and shall take all such other action as is necessary to
register or qualify the Option Shares under all applicable Blue Sky laws of the
States of New York and Connecticut and any other jurisdiction in which such
registration or qualification is required by law. If the Company does not
satisfy the requirements of this paragraph by September 1, 2000, then it shall
pay Executive a bonus in the amount of $25,000 not later than September 15,
2000, and Executive shall retain all other rights hereunder.
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If during the period that Executive is employed by the Company, Executive
shall be discharged by the Company other than for Cause (as hereinafter defined)
including without limitation Executive's termination for Good Reason (as
hereinafter defined) or a Change in Control of the Company (as hereinafter
defined) shall occur, or if Executive shall die or be permanently and totally
disabled within the meaning of Section 422 (e) of the Internal Revenue Code,
then all options relating to the Option Shares shall be immediately vested and
shall be exercisable for a period of one year after any such event.
4. TERMINATION
In the event that Executive's employment is terminated other than for Cause
(as hereinafter defined) including by reason of a "Change in Control" (as
hereinafter defined) of the company, or for "Good Reason" (as hereinafter
defined) the company shall be obligated to pay Executive his full salary and
benefits through the date of termination plus full base salary for one year or
the balance of the term of Agreement, whichever is greater, without an
obligation to mitigate. Any bonus due shall be paid on a pro-rata basis. A
"Change in Control" of the Company shall be deemed to have occurred in the event
of: (i) the direct or indirect sale or exchange by the stockholders of the
Company of all or substantially all of the stock of the Company, in a single or
series of related transactions, after which sale or exchange the stockholders of
the Company immediately prior to such transactions do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the Company (subject to the express understanding that ordinary trading in
the Company's common stock in public markets is not deemed to be a Change in
Control under this provision); (ii) a merger in which the Company is a party
after which merger the stockholders of the Company do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the surviving company; or (iii) the sale, exchange or transfer of all or
substantially all of the Company's assets (other than a sale, exchange or
transfer to one or more corporations in which the stockholders of the Company
before such sale, exchange or transfer retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of the corporations to
which the assets are transferred).
5. TERMINATION FOR GOOD REASON
Executive may terminate his employment hereunder if there is a Change in
Control or for Good Reason at any time during the Employment Term, in which
event Executive agrees to resign from all of his positions with the Company. For
purposes of the Agreement, "Good Reason" shall mean any of the following
(without Executive's express prior written consent):
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The assignment to Executive by the Company of duties inconsistent with a
senior executive officer of the Company, except in connection with the
termination of Executive's employment for Cause;
A Reduction by the Company in Executive's base salary as in effect at the
commencement of the Employment Term or as the same may be increased from time to
time during the term of this Agreement or the Company's failure to increase
Executive's base salary in an amount which is at least equals the amount
prescribed in Section 2 hereof;
A failure by the Company to discharge its obligations under any bonus or
stock option arrangement described in Section 3 hereof:
The Company requiring Executive to be based anywhere other than a location
within the Manhattan or Westchester County New York Metropolitan Area, except
for reasonable travel on the Company's business incidental to the performance of
Executive's duties;
A failure by the Company to continue in effect any benefit or compensation
plan or stock option plan (including any pension, profit sharing, bonus, life
insurance, health, accidental death or dismemberment or disability plan) in
which Executive is participating at the substantially similar benefits to those
in effect at the commencement of the Employment Term, or the taking of any
action by the Company which would adversely affect Executive's participation in
or materially reduce Executive's benefits under any such plans, except to the
extent that any modifications are applicable to all of the Company's executives;
The taking of any action by the Company which would deprive Executive of
any material fringe benefit enjoyed by Executive at the commencement of the
Employment term or the failure by the Company to provide Executive with the
number of vacation days to which the Executive was entitled to in accordance
with the Company's normal vacation policy in effect at the commencement of the
Employment Term, except to the extent that any modifications are applicable to
all of the Company's executives;
Any material breach by the Company of any provision of this Agreement; or,
Any purported termination of Executive's employment which is not effected
pursuant to a Notice of Termination (as hereinafter defined) satisfying the
requirements of Section 6 of this Agreement and for the purposes of this
Agreement no such purported termination shall be effective.
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6. DISCHARGE FOR CAUSE
The Company shall have the right to terminate the employment of Executive
during the Employment Term. If the Company terminates the employment of
Executive other than for Cause, the provisions of Section 4 hereof shall apply.
If the Company terminates the employment of Executive for Cause, its obligations
under this Agreement (including, but not limited to, Section 4) to make any
further payments to Executive shall thereupon cease and terminate (except that
Executive shall be entitled to prompt payment of all accrued salary and expenses
for which he is entitled to reimbursement). As used herein, the term "Cause"
shall be limited to (a) an action by Executive involving willful malfeasance
having a material adverse effect on the Company, (b) death or permanent and
total disability of Executive or (c) Executive being convicted of a felony, or
of any economic, business or commercial crime; provided, however, that any
action or failure to act by Executive shall not constitute "Cause" if, in good
faith, Executive reasonably believed such action or failure to act to be in or
not opposed to the best interests of the Company, or if Executive shall be
entitled, under applicable law or the charter or bylaws of the Company, to be
indemnified with respect to such action or failure to act. Termination of
Executive for Cause pursuant to this Section 6 shall be communicated by a
"Notice of Termination". For purposes of this Agreement, a "Notice of
Termination" shall mean delivery to Executive of a notice from the Company's
Chief Executive Officer stating that in the good faith opinion of the Chief
Executive Officer, Executive was guilty of the conduct set forth in the fourth
sentence of this Section 6 and specifying the particulars thereof in detail. For
purposes of this Agreement, no such purported termination of Executive's
employment shall be effective without such Notice of Termination.
7. EXPENSES
Executive is authorized in incur reasonable expenses for promoting the
business of the Company including expenses for travel and similar items.
Executive will travel coach class for domestic travel and business class for
international travel. The Company will promptly reimburse Executive for all of
the above expenses upon presentation by Executive from time to time of an
itemized account of such expenditures in accordance with the Company's
reasonable procedures as in effect from time to time.
8. EMPLOYEE BENEFITS
Executive shall be provided, to the extent eligible, with all benefits
coverage afforded by the Company to its senior executives, including, without
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limitation, health and hospitalization insurance, disability insurance, travel
insurance and vacations.
Executive shall be included in all pension plans or other similar or
comparable plans, programs and arrangements applicable generally to senior
executives of the Company in accordance with the terms thereof and shall be
provided with the benefits provided by the Company under such plans, programs
and arrangements as allowed by law.
Executive shall receive an all-inclusive monthly automobile of choice (BMW
740 iL, approximate monthly lease fee $900.00).
9. NON-COMPETITION, CONFIDENTIAL INFORMATION AND NON-SOLICITATION
For the duration of Executive's employment during the Employment Term,
Executive agrees that he will not, within the United States of America or in any
foreign country where the Company or any material subsidiary engages in
business, directly or indirectly, engage in any business activity that is
competitive with the business conducted by the Company or any material
subsidiary either as principal, officer, employee, partner or stockholder (other
than as a holder of less than 3% of any class of outstanding voting securities
of any business whose voting securities are listed on a national securities
exchange or traded in the over-the-counter market), or as a director, trustee or
manager of any competing corporation, association, business or firm without
prior written approval of the Board of Directors of the Company.
For the purposes of this Section 9, a subsidiary shall be considered
"material" if the revenues of such subsidiary are greater than 10% of the
revenues of the Company and each member of its consolidated group, taken as a
whole.
Executive recognizes and acknowledges that the name, trade or service
marks, records, plans or methods of the Company's business, together with its
list of customers, constitutes a valuable asset of the Company's business.
Accordingly, at no time shall Executive use such names, marks, records, plans,
or methods of the Company's business nor the Company's proprietary confidential
customers' list or disclose them or any part thereof to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
other than to further the business interests of the Company during the
Employment Term.
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10. LIMITATION ON PAYMENTS
If any amount payable to Executive pursuant to this Agreement which are
deemed to constitute Parachute Payments (as hereinafter defined) when added to
any other payments which are deemed to constitute Parachute Payments, would
result in the imposition on Executive of an excise tax under Section 4999 of the
Internal Revenue Code, then the amounts payable under Section 4 hereof shall be
reduced by the smallest amount necessary to avoid the imposition of such excise
tax; but shall be reduced only if, by reason of such reduction, Executive's Net
After Tax Benefit (as hereinafter defined) shall exceed the Net After Tax
Benefit if such reduction were not made. The foregoing calculations (including
any calculations required under the definition of Net After Tax Benefit) shall
be made, at the Company's expense, by an accounting firm and outside counsel
mutually acceptable to the Executive and the Company. In the event it becomes
necessary to limit any payments under this Agreement, Executive's health and
life insurance shall be the last payments to be so limited; any other payments
payable under this Agreement shall be payable when due until the remaining
maximum permissible amount has been paid to the Executive under this Section 10.
For the purposes of this Section 10, the terms "Net After Tax Benefit" and
Parachute Payment" shall have the meanings set forth below:
"Net After Tax Benefit" means the sum of (i) the total amounts payable to
the Executive under this Agreement, plus (ii) all other payments and benefits
which Executive receives or is entitled to receive from the Company that would
constitute a Parachute Payment, less (iii) the amount of federal income taxes
payable with respect to the foregoing to be paid by Executive (based upon the
rate in effect for such year as set forth in the Internal Revenue Code at the
time of termination of his employment), less (iv) the among of excise taxes
imposed with respect to the payments and benefits described in (i) ad (ii) above
by Section 4999 of the Internal Revenue Code.
"Parachute Payment" means any payment deemed to constitute a "parachute
payment" as defined in Section 280G of the Code.
11. NOTICES
All notices or communications hereunder shall be in writing, addressed as
follows:
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To the Company: Candie's Incorporated
0000 Xxxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, XX 00000
ATTN: Xxxx Xxxx
To Executive: Xx. Xxxx X. XxXxxx
00 Xx. Xxxxxxxx Xxxx
Xxxxxx, XX 00000
With a copy to: Xxx X. Xxxxxxx, Esq.
Xxxxxx, White and Xxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Any such notice or communication shall be sent certified or registered
mail, return receipt requested, postage prepaid, addressed as above (or to such
other address as such party may designate in writing from time to time), and the
actual date of receipt, as shown by the receipt therefore, shall determine the
time at which notice was given.
12. SEVERABILITY; LEGAL FEES
If any provision of this Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability shall
not affect the remaining provisions hereof which shall remain in full force and
effect. In the event of any proceeding or action, the prevailing party shall be
entitled to reasonable fees and costs incurred.
13. ENTIRE AGREEMENT
This Agreement, and any amendments thereof represent the entire agreement
of the parties and shall supersede any and all previous contracts, arrangements
or understandings between the Company and Executive with respect to the subject
matter hereof. This Agreement may be amended at any time by mutual written
agreement of the parties hereof.
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14. GOVERNING LAW
This Agreement shall be construed, interpreted, and governed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such State, without regard to the conflicts
of law principles of such State.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and Executive has hereunto set his hand, as of the date first set forth
above.
/s/ Xxxx X. XxXxxx
--------------------
Xxxx X. XxXxxx
President Wholesale, Candie's Inc.
/s/ Xxxx Xxxx
---------------------------
Xxxx Xxxx
Chief Executive Officer
Candie's Inc.
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