EXHIBIT 10.23
EMPLOYMENT AGREEMENT
AGREEMENT made as of February 3, 1997, between Cygne Designs, Inc.,
a Delaware corporation with an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Company"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, having an address at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
Shemariahu, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires that Executive be employed to serve in
a group senior executive capacity with respect to certain of the Company's
operations in Italy, Israel and the United States, and Executive desires to be
so employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive and Executive hereby accepts
such employment, subject to the terms and conditions herein set forth. Executive
shall hold the office of President of a subsidiary of the Company to be renamed
Sportswear International (USA), Inc.(or a similar name, as available), a
Delaware corporation ("Knits Delaware"), reporting to the Board of Directors of
Knits Delaware and the Company, and shall continue to hold such offices of the
members of the Knits Group (as hereinafter defined) as are currently held by
him. For purposes hereof, "Knits Group" shall mean Knits Delaware, Wear & Co.
S.r.l., a company organized under the laws of Italy, M.T.G.I. - Textile
Manufacturers Group (Israel) Ltd., an Israeli corporation, C.M. Israel Sewing -
Houses, Ltd., an Israeli corporation, and CTB Limited, a British Virgin Islands
corporation.
2. TERM.
The initial term of employment under this Agreement shall begin on
the date hereof (the "Employment Date") and shall continue for a period ending
January 31, 1998, subject to prior termination in accordance with the terms
hereof. Thereafter, this Agreement shall automatically be renewed for successive
one year terms unless either party shall give the other one hundred eighty (180)
days prior written notice of its intent not to renew this Agreement.
3. COMPENSATION.
As compensation for the employment services to be rendered by
Executive hereunder, the Company agrees to pay, or cause to be paid, to
Executive, and Executive agrees to accept, payable in equal installments in
accordance with Company practice, a base annual salary of U.S. $170,000. It is
understood that the Company shall treat 20% of such compensation as subject to
U.S. withholding taxes based on Executive's representation to the Company that
he is not a resident of the United States and that he will spend 20% or less of
his time in the United States.
4. BONUS
With respect to each fiscal year of the Company during the term of
this Agreement, beginning with the fiscal year ending on the Saturday closest to
January 31, 1998, Executive shall be entitled to an annual bonus equal to ten
percent of the consolidated net income before taxes of the Knits Group, payable
within ninety days after the end of each fiscal year, as determined from the
Company's and the members of the Knits Group's audited financial statements,
prepared in accordance with generally accepted accounting principles,
consistently applied; provided that, in any event the reasonable costs of the
office space made available to the members of the Knits Group at the Company's
offices in New York shall be charged to the Knits Group in connection with the
calculation of such bonus.
5. OTHER BENEFITS.
Executive shall be entitled to such vacations and to participate in
and receive any other benefits customarily provided by the Company to its senior
management personnel (including any profit sharing, pension, short and long-term
disability insurance, hospital, major medical insurance and group life insurance
plans in accordance with the terms of such plans) and including stock option
and/or stock purchase plans, all as determined from time to time by the Board of
Directors of the Company.
6. DUTIES.
(a) Executive shall perform such duties and functions as the Board
of Directors of the Company shall from time to time determine and Executive
shall comply in the performance of his duties with the policies of, and be
subject to the direction of, the Board of Directors. At the request of the Board
of Directors, Executive shall serve as an executive officer and director of any
subsidiary and affiliate of the Company and, in the performance of such duties,
Executive shall comply with the policies of the Board of Directors of each such
subsidiary.
(b) During the term of this Agreement, Executive shall devote
substantially all of his time and attention, reasonable vacation time and
absences for sickness excepted, to the business of the Company and its
subsidiaries and affiliates,
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as necessary to fulfill his duties. Executive shall perform the duties assigned
to him with fidelity and to the best of his ability. Notwithstanding anything
herein to the contrary, Executive may engage in other activities so long as such
activities do not unreasonably interfere with Executive's performance of his
duties hereunder and do not violate Section 9 hereof.
(c) Nothing in this Section 6 or elsewhere in this Agreement shall
be construed to prevent Executive from investing or trading in nonconflicting
investments as he sees fit for his own account, including real estate, stocks,
bonds, securities, commodities or other forms of investments.
7. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder may be terminated at any time
upon written notice from the Company to Executive:
(i) upon the determination by the Board of Directors that
Executive's performance of his duties has not been fully
satisfactory for any reason which would not constitute justifiable
cause (as hereinafter defined) upon thirty (30) days' prior written
notice to Executive; or
(ii) upon the determination by the Board of Directors that
there is justifiable cause (as hereinafter defined) for such
termination upon ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter defined
pursuant to subsection (c) herein) pursuant to subsection (f)
hereof.
(c) For the purposes of this Agreement, the term "disability" shall
mean the inability of Executive, due to illness, accident or any other physical
or mental incapacity, substantially to perform his duties for a period of six
(6) consecutive months or for a total of nine (9) months (whether or not
consecutive) in any twelve (12) month period during the term of this Agreement,
as reasonably determined by the Board of Directors of the Company after
examination of Executive by an independent physician reasonably acceptable to
Executive.
(d) For the purposes hereof, the term "justifiable cause" shall mean
and be limited to: the intentional or habitual neglect by Executive of his
duties to the Company; the failure of Executive satisfactorily to render
services to the Company in accordance with his obligations under this Agreement;
Executive's conviction (which, through lapse of time or otherwise, is not
subject to appeal) of any crime or offense
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involving money or other property of the Company, its subsidiaries or affiliates
or which constitutes a felony in the jurisdiction involved; Executive's
performance of any act or his failure to act, for which if Executive were
prosecuted and convicted, a crime or offense involving money or property of the
Company, its subsidiaries or affiliates, or which would constitute a felony in
the jurisdiction involved, would have occurred; any unauthorized disclosure by
Executive to any person, firm or corporation other than the Company, its
subsidiaries and affiliates and its and their directors, officers and employees,
of any confidential information or trade secret of the Company or any of its
subsidiaries or affiliates; any attempt by Executive to secure any personal
profit in connection with the business of the Company or any of its subsidiaries
or affiliates; or the engaging by Executive in any business other than the
business of the Company and its subsidiaries or affiliates which unreasonably
interferes with the performance of his duties hereunder. Upon termination of
Executive's employment for justifiable cause, this Agreement shall terminate
immediately (other than Sections 7, 9, 10, 11 and 12 which shall survive, if at
all, in accordance with their terms) and Executive shall not be entitled to any
amounts or benefits hereunder other than such portion of Executive's annual
salary as has been accrued through the date of his termination of employment.
(e) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary as has been accrued through the date of his death and any
applicable bonus through such date. If Executive's death shall occur while he is
on Company business, the estate of Executive shall be entitled to receive, in
addition to the other amounts set forth in this subsection (e), an amount equal
to one-half his then annual salary.
(f) Upon Executive's "disability", the Company shall have the right
to terminate Executive's employment. Notwithstanding any inability to perform
his duties, this Agreement shall not terminate, and Executive shall be entitled
to receive his compensation (including bonus, if any) as provided herein, until
the earlier of (i) the date he begins to receive long-term disability insurance
benefits under the policy provided by the Company pursuant to Section 5 hereof
or (ii) six months from the date of such disability.
(g) Notwithstanding any provision to the contrary contained herein,
in the event that (I) Executive's employment is terminated by the Company at any
time for any reason other than justifiable cause, disability or death or (II)
Executive terminates his employment for Good Reason (as hereinafter defined),
the Company shall (i) pay Executive, for a period equal to the longer of (1) the
remaining term of this Agreement or (2) one year (such period being hereinafter
referred to as the "Severance Period"), a monthly payment equal to one-twelfth
of his then annual base salary, which amount shall be in lieu of any and all
other payments due and owing to the Executive under the terms of this Agreement,
and (ii) continue to allow Executive to participate, at the Company's expense,
in the Company's health insurance and disability insurance programs, to the
extent permitted under such programs, during the Severance Period (collectively,
the "Severance Payments"). Upon termination of Executive's employment
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pursuant to this Section 7(g), this Agreement (other than Sections 7, 9, 10, 11
and 12 which shall survive, if at all, in accordance with their terms) shall
terminate.
(h) Notwithstanding any provision to the contrary contained herein,
in the event the Company elects not to renew this Agreement upon the expiration
of the initial term hereof, the Company will pay Executive, for a period of one
year, a monthly severance payment equal to one-twelfth of his then annual base
salary.
(i) Executive may terminate his employment at any time upon 180
days' prior written notice to the Company. Upon Executive's termination of his
employment pursuant to this Section 7(i) or his election not to renew this
Agreement, this Agreement (other than Sections 7, 9, 10, 11 and 12 which shall
survive, if at all, in accordance with their terms) shall terminate. In such
event, Executive shall be entitled to receive such portion of Executive's annual
salary and bonus, if any, as has been accrued to date. Executive shall be
entitled to participate in the Company's benefit plans to the extent
participation by former employees is required by law or permitted by such plans,
with the expense of such participation to be as specified in such plans for
former employees.
(j) Executive may terminate his employment for Good Reason (as
hereinafter defined) at any time upon 120 days' prior written notice by
Executive to the Company, which notice shall specify in reasonable detail the
basis for such Good Reason; provided, however, that if the Company within 20
days after receipt of such notice shall perform the obligations, cease the
activity or otherwise cure the matter giving rise to such notice, the
termination by Executive for Good Reason shall not be effective. The term "Good
Reason" shall mean (i) the engagement by the Company or any of its subsidiaries,
without the consent of Executive, in any cut and sew knitwear business in the
United States other than through the Knits Group (provided, however, that the
Company may engage in such business through direct business by the Company in
connection with the sourcing of garments from Brazil or in connection with any
cut and sew knitwear business conducted by the Company under a brandname), (ii)
the failure by the Company to make available office space in New York as
reasonably necessary for the operations of the Knits Group, (iii) the removal of
Executive by the Company without Executive's consent as the President of Knits
Delaware or a material diminution without Executive's consent in the status of
his responsibilities with respect to the Knits Group from those heretofore in
effect, (iv) the failure by the Company to pay Executive the compensation to
which he is entitled hereunder.
8. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
(a) Executive represents and warrants that he is free to enter into
this Agreement and to perform the duties required hereunder, and that there are
no employment contracts or understandings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder.
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(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection with the Company's obtaining life insurance
on the life of Executive, and any other type of insurance or fringe benefit as
the Company shall determine from time to time to obtain.
9. NON-COMPETITION.
(a) As a material inducement to the Company to enter into this
Agreement, Executive agrees that during his employment by the Company and for a
period of two years (except as otherwise specifically provided below) following
the termination of Executive's employment hereunder (the "Non-Competitive
Period"), Executive shall not, (i) directly or indirectly, as owner, partner,
joint venturer, stockholder, employee, broker, agent, principal, trustee,
corporate officer, director, licensor, or in any capacity whatsoever engage in,
become financially interested in, be employed by, render any consultation or
business advice with respect to, or have any connection with, any business which
is competitive with, products or services of the Company or any of its
subsidiaries or affiliates, in any geographic area where, at the time of the
termination of his employment hereunder, the business of the Company or any of
its subsidiaries or affiliates was being conducted or was proposed to be
conducted in any manner whatsoever; provided, however, that Executive may own
any securities of any corporation which is engaged in such business and is
publicly owned and traded but in an amount not to exceed at any one time one
percent (1%) of any class of stock or securities of such corporation, (ii)
request or cause any suppliers or customers with whom the Company or any of its
subsidiaries or affiliates has a business relationship to cancel or terminate
any such business relationship with the Company or any of its subsidiaries or
affiliates or (iii) solicit, interfere with or entice from the Company any
employee (or former employee) of the Company, its subsidiaries or affiliates.
Notwithstanding the foregoing, following the termination of Executive's
employment hereunder, the restrictions set forth in clause (i) of the preceding
sentence shall not apply to any portion of the Non-Competitive Period after the
later of (i) October 1, 1997 or (ii) the end of any period during which payments
are being made to Executive pursuant to Section 7(g) or 7(h).
(b) If any portion of the restrictions set forth in this Section 9
should, for any reason whatsoever, be declared invalid by a court of competent
jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company and its subsidiaries and
affiliates conduct business throughout the United States, the United Kingdom,
Israel, Italy and Hong Kong, that its sales and marketing prospects are for
continued expansion throughout the United States, the United Kingdom, Israel,
Italy and Hong Kong and that, therefore, the territorial and time limitations
set forth in this Section 9 are reasonable and properly required for the
adequate protection of the business of the Company and its subsidiaries and
affiliates. In the event any such territorial or
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time limitation is deemed to be unreasonable by a court of competent
jurisdiction, Executive agrees to the reduction of the territorial or time
limitation to the area or period which such court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary or affiliate shall not constitute a
defense to the enforcement by the Company or any subsidiary of the foregoing
restrictive covenants, but such claim or cause of action shall be litigated
separately.
(e) In the event Executive's employment with the Company terminates
for any reason other than the Company's failure to renew this Agreement, the
Company and Executive agree that in consideration of the payments being made to
Executive pursuant to Section 7, Executive shall be available during the period
such payments are being made to advise and consult with the Board of Directors,
the President and other officers of the Company and its subsidiaries and
affiliates with respect to the affairs of the Company and its subsidiaries and
affiliates on a part-time basis, in response to requests for such advisory and
consulting services by the Board of Directors, or other officers of the Company
or its subsidiaries and affiliates, subject to the conditions that (i) Executive
shall not be required to devote a major portion of his time to such services,
(ii) such services shall not unreasonably interfere with the performance of
other employment or consulting duties Executive may have, (iii) Executive shall
not be required to perform such services during usual vacation periods and
reasonable periods of illness or other incapacitation, (iv) such services shall
be performed at times and places as shall be chosen by Executive, and which will
result in the least inconvenience to Executive, and (v) all other provisions of
this Section 9 shall apply. Notwithstanding the foregoing, in the event that
Executive seeks full-time employment with a third party and such third party
will not accept Executive's services for as long as he is committed under this
subsection (e) to provide consulting services to the Company, then if the Board
of Directors of the Company determines in its reasonable discretion that
Executive's employment with the third party will not cause him to breach the
provisions of Section 9 of this Agreement (other than this subsection (e)) and
Executive provides the Board of Directors with a letter signed by the third
party stating that such third party will not accept Executive's services as
described above, the provisions of this subsection (e) shall immediately
terminate and be of no further force or effect.
10. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the Company, and
with all necessary detail for a complete understanding of the same, all
developments, know-how, discoveries, inventions, improvements, concepts, ideas,
writings, formulae, processes and methods (whether copyrightable, patentable or
otherwise) made, received, conceived, acquired or written during working hours,
or otherwise, by Executive (whether or not at the request or upon the suggestion
of the Company) during the period of his employment with, or rendering of
advisory or consulting services to, the Company or any of its subsidiaries or
affiliates, solely or jointly with others in or
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relating to any activities of the Company or its subsidiaries or affiliates
known to him as a consequence of his employment or the rendering of advisory and
consulting services hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Executive further agrees to deliver to the Company any and
all drawings, notes, specifications and data relating to the Subject Matter, and
to execute, acknowledge and deliver all such further papers, including
applications for copyrights or patents, as may be necessary to obtain copyrights
and patents for any thereof in any and all countries and to vest title thereto
to the Company. Executive shall assist the Company in obtaining such copyrights
or patents during the term of this Agreement, and any time thereafter on
reasonable notice and at mutually convenient times, and Executive agrees to
testify in any prosecution or litigation involving any of the Subject Matter.
11. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or at
any time following termination of this Agreement, directly or indirectly,
disclose or permit to be known (other than as is required in the regular course
of his duties (including without limitation disclosures to the Company's
advisors and consultants) or is required by law (in which case Executive shall
give the Company prior written notice of such required disclosure) or with the
prior written consent of the Board of Directors of the Company), to any person,
firm or corporation, any confidential information acquired by him during the
course of, or as an incident to, his employment or the rendering of his advisory
or consulting services hereunder, relating to the Company or any of its
subsidiaries or affiliates, the directors of the Company or its subsidiaries or
affiliates, any client of the Company or any of its subsidiaries or affiliates,
or any corporation, partnership or other entity owned or controlled, directly or
indirectly, by any of the foregoing, or in which any of the foregoing has a
beneficial interest, including, but not limited to, the business affairs of each
of the foregoing. Such confidential information shall include, but shall not be
limited to, proprietary technology, trade secrets, patented processes, research
and development data, know-how, market studies and forecasts, competitive
analyses, pricing policies, employee lists, personnel policies, the substance of
agreements with customers, suppliers and others, marketing or dealership
arrangements, servicing and training programs and arrangements, customer lists
and any other documents embodying such confidential information. This
confidentiality obligation shall not apply to any confidential information which
thereafter becomes publicly available other than pursuant to a breach of this
Section 11(a) by Executive.
(b) All information and documents relating to the Company and its
affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other
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similar documents containing confidential information, including copies thereof,
then in Executive's possession or control shall be returned and left with the
Company.
12. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 9, 10 or 11 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by an court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
13. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement shall be
valid unless made in writing and signed by both of the parties hereto.
14. GOVERNING LAW.
This Agreement shall be governed by the laws of New York applicable
to agreements made and to be performed therein.
15. SEVERABILITY.
The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
16. NOTICES.
Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand or courier, or sent by
certified mail, return receipt requested, to the addresses set forth above or
such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or at the
expiration of three days in the event of a mailing.
17. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
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18. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, supersedes all prior agreements, both
written and oral, between the parties with respect to the subject matter hereof,
including, without limitation, that certain consulting agreement dated as of
October 1, 1993 and shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, heirs, distributors,
successors and assigns.
19. SURVIVAL.
Except as otherwise expressly provided herein, the termination of
Executive's employment hereunder or the expiration of this Agreement shall not
affect the enforceability of Sections 7, 9, 10, 11 and 12 hereof.
20. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.
21. HEADINGS.
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
Cygne Designs, Inc.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chairman and CEO
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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