EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made between SIGNAL
APPAREL COMPANY, INC., an Indiana corporation, with its
principal offices at ▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ (the "Company") and ▇▇▇▇▇ ▇▇▇▇▇ (the "Employee").
RECITALS:
The Company and the Employee have reached an
understanding with respect to the employment of the Employee
by the Company. The parties desire to set forth their
understanding with respect to such employment fully and
completely in writing.
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company shall employ the
Employee, and the Employee shall work for the Company upon
the terms and conditions set forth herein.
2. Exclusive Agreement. During the term of this
Agreement, the Employee shall devote his full time and best
effort to the business of the Company.
3. Employment Term. Unless earlier terminated in
accordance with the terms of this Agreement, the Employee s
term of employment by the Company (the "Employment Term")
shall be for a period of three (3) years commencing August
1, 1995.
4. Confidential Information. The Employee
acknowledges that any use of the Company s Confidential
Information (defined below) by the Employee other than for
the sole benefit of the Company would be wrongful and cause
irreparable harm to the Company. Accordingly, the Employee
shall not, at any time during or subsequent to his
employment by the Company, without the express written
consent of the Company, publish, disclose or divulge to any
person, firm or corporation, or use, directly or indirectly,
for his own benefit or for the benefit of any person, firm
or corporation, for use other than for the Company, any
property, trade secrets, or Confidential Information
(defined below) of the Company or its affiliates.
"Confidential Information" includes, but is not limited to
all data, reports, interpretations, forecasts, records,
statements (written and oral) and documents of any kind
relating to the Company s costs and financial information,
manufacturing methods or processes, market studies,
products, existing and potential customers, pricing methods
and strategies, new product plans and sources of supply. In
addition, all other information disclosed to the Employee or
which the Employee shall obtain during such employment with
the Company which the Employee has a reasonable basis to
believe to be confidential, or which the Employee has a
reasonable basis to believe the Company treats as
confidential, shall be presumed to be Confidential
Information.
5. Salary and Expenses. The Company shall pay the
Employee a salary of Three Hundred Thousand ($300,000.00)
per year payable in accordance with the normal payroll
practices of the Company. The Company shall also reimburse
the Employee for all reasonable, legitimate and documented
business expenses incurred by him, on behalf of the Company,
upon submission of accounts in satisfactory form, subject to
such limitations as the Company may impose in its discretion
from time to time.
6. Additional Benefits. In addition to the
compensation described in Section 5, the Employee shall be
entitled during the Employment Term to receive the following
additional benefits:
(a) Health Insurance. The Company will provide
the Employee with health insurance coverage consistent with
the coverage provided to other employees of the Company from
time to time.
(b) Retirement Plans. The Employee will be
eligible to participate in the Company s 401(k) retirement
plan and such other retirement plans as may be established
by the Company from time to time.
(c) Holidays and Vacations. The Employee shall
be entitled to such paid holidays as may be designated by
the Company. In addition, the Employee shall be entitled to
three weeks of paid vacation for each year during which time
his compensation shall be paid in full. Notwithstanding any
other provisions of this Agreement, in the event Employee is
terminated from the Company for any reason, Employee will be
entitled to a payment reflecting Employee's unused accrued
vacation through such date of termination.
(d) Sick Leave. The Employee shall be entitled
to sick leave in accordance with Company practices.
(e) Stock Options. Effective August 10, 1995,
the Company agrees to grant to the Employee options to
purchase 100,000 shares of common stock which will be
exercisable one year from the date of grant and will be
governed by the terms of the Company's 1985 Stock Option
Plan.
(f) Bonus. The Employee has the following bonus
plan in effect for the three year term of this employment
agreement:
Employee is eligible to receive a year end bonus based
upon the pre-tax earnings of the Company for each fiscal
year, if any. This bonus will equal 10% of the Company's
pre-tax earnings up to $5 million and 5% of the Company's
pre-tax earnings in excess of $5 million.
Bonus payments payable pursuant to this Section shall
be made in a lump sum payment within two weeks of the
finalization of the Company's year end audit.
Notwithstanding the foregoing, Employee must be
employed with the Company on December 31 of any given year
in order to be eligible to receive the above bonus for that
year. In the event Employee is not so employed, the
following provisions shall apply:
(1) If Employee is terminated for cause by the
Company, or if Employee voluntarily terminates
Employee's employment with the Company prior to
December 31 of any given year (except as described
under the circumstances in Section 7(d)), Employee
shall receive no bonus for that year or any
subsequent year;
(2) If Employee is terminated by the Company without
cause, prior to December 31 of any given year or
if Employee exercises Employee's rights under
Section 7(d), whether or not Employee is in breach
of this Agreement or if this Agreement is
terminated prior to December 31 upon the death or
disability of Employee as provided in Section
7(a), Employee shall receive only a prorata
portion of any bonus earned pursuant to this
Section 6 which prorata portion shall be based
upon the percentage of 365 calendar year days for
which Employee is employed during said calendar
year. Any bonus due pursuant to this subsection
(2) shall be paid as provided in this Section 6.
Any direct or indirect payments made by the Company to
or on behalf of the Employee determined by the Company s
accountants to be reportable for tax purposes shall be
treated as compensation to the Employee.
7. Termination of Employment.
(a) The Employee s employment pursuant to this
Agreement shall terminate upon the death of the Employee or
upon his inability, by reason of a mental or physical
condition, to perform his duties hereunder for an
uninterrupted period of sixty (60) days ("Disability"), and
may be terminated for "cause" (as defined below) by the
Company at any time during the Term immediately upon written
notice of termination (except as provided otherwise below)
given by the Company to the Employee describing such cause.
For purposes of this Agreement, "cause" for termination
shall be deemed to exist if: (i) the Employee is convicted
of a felony which involves an intentional act of the
Employee; (ii) the Employee engages in dishonesty or fraud;
or (iii) the Employee breaches any of his material
obligations as President and Chief Operating Officer of the
Company.
Any written notice of termination for cause pursuant to
this Section shall be a written notice which (a) indicates
the specific termination provision relied upon, (b) sets
forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee's
employment, and (c) if the date of termination is other than
the date of receipt of such notice, specifies the
termination date. In the event that Employee's employment
is terminated pursuant to subsection (iii) above, Employee
shall have a period of thirty (30) days to cure the breach
of Employee's obligations under this Agreement as described
in the Notice of Termination. In the event that Employee
cures such breach within said thirty (30) day period, the
notice of termination shall be considered rescinded. In the
event that Employee fails to cure such breach, then this
Agreement will terminate without further notice to Employee
as set forth in the notice of termination, and the
provisions of 7(b) shall be applicable. Employee shall not
have the opportunity to cure any termination for cause
pursuant to subsections (i) and (ii) above.
(b) In the event (i) the Employee s employment
under this Agreement is terminated for cause as provided
above, or (ii) the Employee voluntary terminates his
employment with the Company, other than pursuant to Section
7(d), prior to the end of the Employment Term, the Company
shall promptly pay to the Employee (or to the Employee s
legal representatives) the amount of any compensation
attributable to periods prior to such termination, plus the
amount of any reimbursable expenses. No other payments
shall be due Employee.
(c) In the event the Employee s employment is
terminated without cause, whether or not Employee is in
breach of this Agreement, or the Employee loses his
employment for any other reason other than pursuant to
Section 7(b), including but not limited to bankruptcy,
closure, reorganization, buyout, merger, consolidation or
for any other reason, the Employee is automatically entitled
to severance payments equal only to one year's salary as
provided in Section 5 above and continuation of existing
health care benefits for one year. No other payments shall
be due Employee except any bonus payments which may be due
pursuant to Section 6(f). Said severance payments shall be
paid in the same manner and on the same schedule (i.e.
monthly, weekly, etc.) as Employee was being paid on the
date of termination. To the extent possible under the
Company's Stock Option Plan, all stock options shall
automatically vest and become immediately exercisable under
this provision. Severance payments being made pursuant to
this Section shall survive the death of Employee.
(d) Notwithstanding the provisions of Section
7(b), in the event of a merger, consolidation, buyout,
reorganization or any other similar occurrence, Employee
shall have the option of terminating Employee's employment
with the Company and receiving the salary and benefits as
provided in Section 7(c) above. In the event Employee
exercises this option prior to December 31 of any given
year, the provisions of Section 6(f)(2) shall apply. Such
option shall be exercised by written notice from Employee to
the Company which Notice must be given within thirty (30)
days of the definitive closing date of any such occurrence.
8. Duty of the Employee upon Termination. The
Employee shall, upon termination of this Agreement, return
to the Company all of the Company s records of any type and
all literature, supplies, letters, written or printed forms,
and/or memorandum pertaining to the Company s business.
9. Covenants on Termination.
(a) During the Employment Term and for a period
of one (1) year thereafter, the Employee shall not, directly
or indirectly, on Employee's own behalf or on behalf of any
other person, corporation, partnership or any other entity,
whether as an employee, officer, director, proprietor,
partner, investor, consultant, advisor, agent or in any
other capacity, induce or attempt to induce any customer of
the Company to reduce its business with the Company, or
solicit or attempt to solicit any employees of the Company
to leave the employ of the Company, nor shall Employee
affiliate with any party engaging in the above actions.
(b) The Employee acknowledges that the
restrictions contained in this Section are reasonable and
necessary to protect the business and interests of the
Company and that any violation of these restrictions will
cause substantial and irreparable injury to the Company.
Therefore, notwithstanding the provisions of Section 13
below, the Employee agrees that the Company is entitled, in
addition to any other remedies, to preliminary and permanent
injunctive relief to secure specific performance, and to
prevent a breach or contemplated breach of this Agreement.
10. Severability. In the event any clause or
provision of this Agreement shall be held to be invalid or
unenforceable, the same shall not affect the validity or
enforceability of any other provision herein, and this
Agreement shall remain in full force and effect in all other
respects. If a claim of invalidity or unenforceability of
any provision of this Agreement is predicated upon the
length of the terms of any covenant or the area covered
thereby, such provision shall not be deemed to be invalid or
unenforceable; rather, such provision shall be deemed to be
modified to the maximum area or the maximum duration as any
court of competent jurisdiction shall deem reasonable, valid
and enforceable.
11. Entire Agreement. The parties understand and
agree that this Employment Agreement is the entire Agreement
between the parties regarding the terms and conditions of
the Employee s employment and there are no other agreements.
The terms of this Agreement may not be varied, modified,
supplemented or in any other way changed by extraneous
verbal or written representations by the Company or its
agents to the Employee, unless by amendment to this
Agreement executed in writing by both parties.
12. Governing Law. The Agreement shall be governed
by, construed and enforced in accordance with the laws of
the state of Tennessee.
13. Arbitration. Each party agrees not to bring suit
against the other party in the courts of any jurisdiction in
connection with any dispute which might be the subject of a
civil action arising from the interpretation or application
of this Agreement. Each party agrees that any such dispute
shall be finally resolved by submission to compulsory
commercial arbitration to be held in Chattanooga, Tennessee
according to the American Arbitration Association rules, by
one or several arbitrators appointed. The parties agree to
be bound by the decision of the arbitration and that a
judgment of any court of competent jurisdiction may be
rendered upon the award made pursuant to said submission to
arbitration.
14. Survival. The Covenants of Paragraphs 4, 9, 10,
11 and 13 shall survive the termination of this Agreement.
15. Notice. All notices, demands, requests, consents,
reports, approvals, or other communications which may be or
are required to be given, served, or sent pursuant to this
Agreement shall be in writing and shall be mailed by first
class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram or
hand delivery, addressed as first set forth above, or such
other address as a party may subsequently specify in
writing.
IN WITNESS WHEREOF, the parties have executed this
Agreement this 27th day of November, 1995.
SIGNAL APPAREL COMPANY, INC.
Dated: 11/27/95 By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Exec. V. P. & CFO
Dated: 11/27/95 /s/▇▇▇▇▇ ▇▇▇▇▇
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