EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated October 10, 1995, between HAMPSHIRE DESIGNERS, INC.,
a Delaware corporation having its principal executive offices at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
an individual having his principal place of residence at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Executive").
I. Employment. The Company hereby employs the Executive; and the Executive
hereby accepts employment by the Company upon the terms and conditions
hereinafter set forth.
II. Term. The Agreement shall commence and take effect on the date the
Executive commences employment with the Company, and end on the date this
Agreement is terminated by either the Company or the Executive, as hereinafter
provided in this Section II.
(A) The Company may, at its election, terminate its obligations under
this Agreement as follows:
(1) If the Executive becomes ill or is injured so that he is
unable to perform the services required of him hereunder and such
inability to perform continues for a period in excess of ninety (90)
consecutive days and such inability is continuing at the time of such
notice, then the Company may terminate its obligations hereunder on no
less than thirty (30) days advance written notice to the Executive,
provided that the Executive shall receive disability payments to which
he is then entitled under the Company's group long-term disability
policy, then in effect, during the period commencing on the date of
such termination and ending on the date such disability ends or age
65, whichever first occurs.
(2) For just cause upon no less than five (5) days advance
written notice of such termination to the Executive. Termination of
the Executive's employment by the Company shall constitute a
termination "for just cause" only if such termination is for one or
more of the following reasons: (a) a material breach by the Executive
of the terms of this Agreement; (b) the habitual use of drugs
(including alcohol) by the Executive to an extent that he is unable to
fulfill his duties under this Agreement; or (c) the Executive having
been convicted of a felony; or (d) the Executive having been convicted
of a misdemeanor involving dishonesty or criminal conduct against the
Company, its parent company or a sister company.
(3) Without cause upon no less than five (5) days advance written
notice to the Executive provided that the Company shall pay to the
Executive an amount each month equal to Eleven Thousand, Two Hundred,
Fifty Dollars ($11,250.00), for a period of thirty-six (36) months
after such termination, except that the thirty-six (36) month period
shall be decreased by the number of full calendar months in which the
Executive has been employed by the Company as of the date of the
notice of termination, but the period shall not be reduced to less
than twelve (12) months.
(B) If the Company terminates the Executive in accordance with this
Section II(A)(3) or Section II(A)(1), the Executive shall receive his
"Bonus" as defined in Section III(B) for the year in which such termination
occurs, prorated to reflect the number of whole calendar months of
employment completed by the Executive in the year of termination. If the
Company may elect, in accordance with Section II(A)(1) hereof, to terminate
this Agreement, then such termination shall be deemed to have been made
under Section II(A)(1) and not in accordance with this Section II(A)(3).
(C) The Executive may, at his election, terminate his obligations
under Sections IV and V hereof upon six (6) months advance written notice
thereof to the Company and from and after the delivery of such notice, the
Company shall have no further obligations under this Agreement unless it
shall elect, by notice to the Executive to continue to pay the Executive as
herein provided, for not in excess of the six month period commencing with
the date of delivery of the notice and in such event the Executive shall
continue to perform his obligations under Sections IV and V during such
period. If the Company does not elect to continue to pay the Executive as
herein provided, the Executive may seek other employment immediately,
limited only by the requirements of Section VIII hereof, and shall have no
further obligations to the Company under Sections IV and V hereof.
III. Compensation and Benefits. The Company shall do the following:
(A) Pay the Executive a base salary (the "Salary") for the first
nineteen months of employment at the annual rate of One Hundred,
Thirty-Five Thousand Dollars ($135,000) in equal bi-weekly installments
commencing October 1995. The Salary shall be reviewed by the Board of
Directors of Hampshire Designers, Inc. upon recommendation of Mr. ▇▇▇▇▇▇
Warsaw, Chief Executive Officer, during the last two months of 1996 based
on the Executive's performance.
(B) Pay the Executive an annual bonus (the "Bonus") for each fiscal
year of employment within fifteen (15) days after the completion of the
annual audit of the Company's financial statements for such year by its
independent certified public
accountant (the "CPA"), but no later than 130 days after the end of the fiscal
year, in an amount equal to:
(1) Sixty-Seven Thousand Dollars ($67,000) annually for the years
1995, 1996 and 1997;
(2) A percentage of net income before tax ("NIBT", as defined in
the Agreement and Plan of Merger dated June 5, 1995 among Hampshire
Group, Limited, The Winona Knitting ▇▇▇▇▇, Inc. and ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇) in excess of $1,000,000 of the Winona Knitting ▇▇▇▇▇
Division and the San Francisco Knitworks Division as set forth in the
following table:
Year Bonus Percent
1996 14.20%
1997 10.65%
1998 7.10%
(But any net losses of San Francisco Knitworks Division shall be excluded from
the calculation); and
(3) Two percent (2%) of the aggregate amount in accordance with
the Hampshire Designers' Profit Incentive Plan (the "Plan") calculated
on a basis with all sweater subsidiaries and divisions included other
than the Winona Knitting ▇▇▇▇▇ Division, as such Plan may be amended
from time to time. The two percent (2%) participation in the Plan is
in consideration of the Executive's contribution to the sweater
company as a whole.
(C) Notwithstanding the provisions of Section II(B) and II(C), the
Executive shall be paid the Bonus set forth above in Section III(B)(1) and
III(B)(2), exclusive of San Francisco Knitworks Division, irrespective of
termination of his employment with the Company.
(D) Grant the Executive the right to participate in the Hampshire
Group, Limited Common Stock Purchase Plan for Directors and Executives, as
amended from time to time, which will permit the Executive to defer until
retirement or such other time as elected by the Executive, 4% to 10% of his
annual Salary and l0% to 40% of his annual Bonus, excluding such Bonus
arising from Paragraph B(2) above, through the purchase of Hampshire Group
Common Stock.
(E) The Executive shall participate in the Company's fringe benefits
programs including group health, dental, disability and life insurance as
are generally available to executives of the Company and Hampshire Group,
Limited. Further, the Executive shall be furnished a Company paid
automobile on the same basis as other senior executives of Hampshire Group,
Limited.
(F) The Company shall reimburse the Executive for reasonable and
necessary business expenses incurred performing his duties.
IV. Duties. The Executive shall serve as President of Winona Knitting ▇▇▇▇▇
Division and hereby promises to perform and discharge well and faithfully the
duties which may be assigned to him from time to time by the Company and Mr.
▇▇▇▇▇▇ Warsaw, Chief Executive Officer of Hampshire Designers, Inc., in
connection with the conduct of the Company's business. Election or appointment
as a director or other officer of the Company during the term of this Agreement
will not be a basis for the Executive to receive additional compensation.
V. Extent of Services. The Executive shall devote the necessary working
time, attention and energies to the business of the Company and shall not during
the term of this Agreement be engaged in any business activity other than the
Executive's investment in Winona USA (which time devoted thereto shall not
exceed twenty (20) hours per month), whether or not such business activity is
pursued for profit, gain or other pecuniary advantage, but this shall not be
construed as preventing the Executive from investing his personal assets in
businesses which do not compete with the Company in such form or manner as will
not require any services on the part of the Executive in the operation of the
affairs of the companies in which such investments are made and in which his
participation is solely that of an investor, and except that the Executive may
purchase securities in any corporation whose securities are regularly traded
publicly, provided that such purchase shall not result in his owning
beneficially at any time, one percent (1%) or more of the equity securities of
any corporation engaged in a business competitive with that of the Company or
its affiliates.
VI. Disclosure of Information. The Executive recognizes and acknowledges
that the Company's trade secrets, know-how and proprietary processes as they may
exist from time to time are valuable, special and unique assets of the Company,
access to and knowledge of which are essential to the performance of the
Executive's duties hereunder. The Executive will not, during or after the term
of his employment by the Company, in whole or in part, disclose such secrets,
know-how or processes to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever, nor shall the Executive make use of
any such property for his own purposes or for the benefit of any person, firm,
corporation or other entity (except the Company) under any circumstances during
or after the term of his employment, provided that after the term of his
employment these restrictions shall not apply to such secrets, know-how and
processes which are therein the public domain, provided that the Executive was
not responsible, directly or indirectly, for such secrets, know-how or processes
entering the public domain without the consent of the Company.
VII. Inventions. The Executive hereby sells, transfers and assigns to the
Company, or to any assignee designated by the Company all of the entire right,
title and interest of the Executive in and to all inventions, ideas, disclosures
and improvements, whether patented or unpatented, and copyrightable material,
made or conceived by the Executive, solely or jointly, during the term hereof
which relate to methods, apparatus, designs, products, processes or devises,
sold, leased, used or under construction or development by the Company, or any
subsidiary; or which otherwise relate to or pertain to the business, functions
or operations of the Company or any subsidiary, or which arise from the efforts
of the Executive during the course of his employment by the Company. The
Executive shall communicate promptly and disclose to the Company, in such form
as the Company may request, all information, details and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and the
Executive shall execute and deliver to the Company such formal transfers and
assignments and such other papers and documents as may be required of the
Executive to permit the Company or any person or entity designated by the
Company to file and the patent applications; and as to copyrightable material,
to obtain copyright thereof. Any invention relating to the business of the
Company or any subsidiary and disclosed by the Executive within one (1) year
following the termination of this Agreement shall be deemed to fall within the
provisions of this paragraph unless proved to have been first conceived and made
following such termination.
VIII. Non-competition; Non-solicitation. For the "Specified Period" (as
defined below) following the termination of the Executive, the Executive shall
not, directly or indirectly:
(A) Compete with the Company, or any subsidiary of the Company, or
Hampshire Group, Limited in the business in which the Company or its
affiliates is engaged at the commencement of the Specified Period or then
engaged; or
(B) Induce executives or employees of the Company to leave their
employment with the Company in order to accept employment with another
person or entity; or
(C) Induce customers of the Company to purchase products or services
then sold by the Company or its affiliates from another person or entity.
The "Specified Period," in case of a termination pursuant to Section II(A)(1)
or Section II(A)(3) shall be the period during which payments are made plus one
(l) year, and in the case of a termination pursuant to Section II(A)(2), or
II(C) shall be two (2) years following such termination, or resignation, or such
longer period as provided in the Agreement and Plan of Merger dated as of June
5, l995 among Hampshire Group, Limited, The Winona Knitting ▇▇▇▇▇, Inc. and
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
IX. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Company and if this Agreement is not honored by
the new entity having controlling ownership, then the Company agrees to pay the
Executive pursuant to the terms of payment set forth in Section II(A)(3),
(II)(B) and III(C) hereof.
X. Injunctive Relief. If there is a breach of the provisions of Sections
VI, VII or VIII of this Agreement, the Company shall be entitled to an
injunction restraining the Executive from such breach. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies for such
breach or threatened breach.
XI. Insurance. The Company may, at its election and for its benefit, insure
the Executive against accidental loss or death for an amount not to exceed Two
Million Dollars ($2,000,000) and the Executive shall submit to such physical
examinations and supply such information as may be required in connection
therewith.
XII. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if sent by registered mail to his residence in the
case of the Executive, or to the Company at ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: Chairman, or to such officer or address as the
Company shall notify Executive.
XIII. Waiver of Breach. A waiver by the Company or Executive of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
XIV. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the Laws of the State of Delaware.
XV. Entire Agreement. This instrument contains the entire agreement of the
parties. It may be changed only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first hereinabove written
Attest: HAMPSHIRE DESIGNERS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Secretary ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Executive Officer
Witness: EXECUTIVE
/s/ ▇▇▇▇▇▇▇ ▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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