EMPLOYMENT AGREEMENT
(▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇)
AGREEMENT, dated as of December 31, 2000, between The ▇▇▇▇▇▇ ▇▇▇
Company, Inc., a Delaware corporation, with its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "Corporation"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
residing at Hidden Spring Farm, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Executive").
RECITALS
A. The Executive has served as the Chairman of the Corporation since
June 2, 1997 and Chief Executive Officer of the Corporation from June 2, 1997 to
May 19, 2000, and prior thereto as Chairman and Chief Executive Officer of The
▇▇▇▇▇▇ ▇▇▇ Companies, Inc., predecessor-in-interest to the Corporation ("Old
▇▇▇▇▇▇ ▇▇▇").
B. The Corporation and the Executive are parties to an Employment
Agreement dated as of January 4, 1998, as amended on January 1999 (the "Prior
Employment Agreement").
C. The Corporation and the Executive desire to terminate the Prior
Employment Agreement.
D. The Corporation desires to secure the continued services of the
Executive, and the Executive desires to continue to furnish services to the
Corporation, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, the following terms
shall have the respective meanings specified below and be equally applicable to
the singular and plural of terms defined:
(a) "AAA" shall mean the American Arbitration Association.
(b) "Arbitrator" shall have the meaning set forth in Section 29
hereof.
(c) "Base Salary" shall have the meaning set forth in Section 5
hereof.
(d) "Board" shall mean the Board of Directors of the Corporation.
(e) "Bonus" shall mean, for any Fiscal Year during the Term, the
Executive's allocable portion of the Cash Bonus Pool for such year, determined
in accordance with Section 6 hereof.
(f) "Cash Bonus Pool" shall have the meaning set forth in Section 6
hereof.
(g) "Cause" shall mean (i) conviction of the Executive in respect of
a felony, (ii) perpetration by the Executive of (x) an illegal act which causes
significant economic injury to the Corporation or (y) a common law fraud against
the Corporation, or (iii) willful violation by the Executive (a "Material
Insubordination") of a specific written direction from the Board concerning one
or more matters of a material nature for the Corporation or its business or
operations (following a warning in writing in respect thereto from the Board).
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(i) "Compensation Committee" shall mean the compensation committee
of the Board, all of whose members are "outside directors" within the meaning of
Section 162(m) of the Code.
(j) "Corporation Senior Managers" shall mean the Chairman of the
Board, the President, the Senior Vice President--Manufacturing and Sourcing, the
Senior Vice President--Administration and Finance (Chief Financial Officer) and
up to one other executive officer of the Corporation as determined by the
Compensation Committee in consultation with the Chief Executive Officer.
(k) "Disabled" shall mean, with respect to the Executive, being
physically or mentally disabled, whether totally or partially, so that he has
been substantially unable to perform his services hereunder for a consecutive
period of more than six (6) months or for shorter periods aggregating six months
during any twelve-month period.
(l) "Dispute" shall have the meaning set forth in Section 29 hereof.
(m) "EBITAB" shall mean for any Fiscal Year of the Corporation, the
consolidated earnings before interest, income taxes, amortization of the good
will of the Corporation and its consolidated subsidiaries, non-cash charges for
stock based compensation, and bonuses for Corporation Senior Managers, as
determined pursuant to generally accepted accounting principles in effect in the
United States of America from time to time.
(n) "Effective Date" shall mean December 31, 2000.
(o) "Fiscal Year" shall mean the fifty-two or fifty-three week
period ending on the Saturday closest to December 31 in any year.
(p) "FAA" shall have the meaning set forth in Section 29 hereof.
(q) "Good Reason" shall mean the continuation of any of the
following events for more than ten (10) days after the Corporation's receipt
from the Executive of written notice thereof:
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(i) the Executive shall fail to be reelected as a Director of
the Corporation and as Chairman of the Board and Chairman of the Executive
Committee of the Board (if any) or shall be removed from any such positions at
any time during the Term (other than for Cause);
(ii) the Executive shall fail to be vested with the powers and
authority of Chairman of the Board of the Corporation as described in Section
4(a) hereof, or the powers and authority of such position or his
responsibilities with respect thereto shall be diminished in any material
respect;
(iii) the Executive shall have assigned to him without his
express written consent any duties, functions, authority or responsibilities
that are inconsistent with the Executive's positions described in Section 4
hereof;
(iv) the Executive's principal place of employment is changed
to a location more than twenty-five (25) miles from the prior location without
the Executive's prior written consent;
(v) any material failure by the Corporation to fulfill any of
its obligations under this Agreement (other than pursuant to Section 4(b)),
including, without limitation, the failure to make any material payment required
to be made by the Corporation pursuant to Sections 5, 6 and 7 hereof within five
(5) business days after the date such payment is required to be made;
(vi) any purported termination by the Corporation of the
Executive's employment otherwise than as expressly permitted by, and in
compliance with all conditions and procedures of, this Agreement;
(vii) the Corporation shall fail to comply with the provisions
of Section 17 or Section 23(a) hereof; or
(r) "Maximum Bonus" shall have the meaning set forth in Section 6
hereof.
(s) "Old ▇▇▇▇▇▇ ▇▇▇" shall have the meaning set forth in the
Recitals.
(t) "Prior Employment Agreement" shall have the meaning set forth in
the Recitals.
(u) "RONA Net Assets" shall mean at the time of any calculation, the
difference between total assets of the Corporation and its consolidated
subsidiaries exclusive of unrestricted cash and cash equivalents less (i) total
interest free liabilities of the Corporation and
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its consolidated subsidiaries and (ii) the after tax cash gain on assets which
have been disposed of other than in the ordinary course of business, as
determined pursuant to generally accepted accounting principles in effect in the
United States of America from time to time.
(v) "Section 7 Bonus" shall mean, for any Fiscal Year during the
Term, the bonus payable to the Executive determined in accordance with Section 7
hereof.
(w) "Term" shall have the meaning set forth in Section 3 hereof.
2. Employment. The Corporation shall continue to employ the Executive,
and the Executive shall continue to serve the Corporation, upon the terms and
conditions hereinafter set forth.
3. Term of Employment. Subject to the terms and conditions hereinafter
set forth, the term of the Executive's employment hereunder shall commence as of
the Effective Date and shall continue until December 31, 2005, unless earlier
terminated pursuant to the provisions of Sections 10, 11, 12 or 13 hereof (the
"Term").
4. Duties and Extent of Services.
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(a) Chairman of the Board. During the Term, the Executive shall
serve as Chairman of the Board of the Corporation faithfully and to the best of
his ability, and shall devote substantially all of his business time, energy and
skill to such employment, it being understood and agreed that the Executive may
serve on the boards of directors or equivalent governing bodies of other
business corporations or other business organizations; provided, however, that
(i) such other corporations or other organizations are not in direct competition
with the Corporation and/or its subsidiaries and (ii) such service does not
materially interfere with the performance by the Executive of his duties
hereunder. The Executive shall be invested with the duties and authority that
are customarily delegated to a Chairman of the Board of a public corporation and
shall devote substantial time to obtaining suitable acquisitions for the
Corporation and maintaining its relationship with key customers. The Executive
shall report to and be subject to the direction of the Board of Directors of the
Corporation.
(b) Board Membership. Although it is understood that the right to
elect directors of the Corporation is by law vested in the stockholders of the
Corporation, the Executive shall serve as Chairman of the Board and of the
Executive Committee of the Board (if any).
5. Base Salary. During the Term, the Corporation shall pay the
Executive a base salary ("Base Salary") of Five Hundred Thousand Dollars
($500,000), or such higher amount as
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the Board may from time to time determine, payable in accordance with the
Corporation's customary practice.
6. Incentive Compensation.
--------------------------
(a) Amount. The Corporation shall create an annual cash bonus pool
("Cash Bonus Pool") for payments to the Corporation Senior Managers calculated
as follows:
(x) EBITAB for such Fiscal Year, less
(y) twenty percent (20%) of the average monthly RONA Net Assets
for such Fiscal Year times
(z) twenty-five percent (25%)
provided, however, that the financial aspects of the acquisition or disposition
of a business shall not be considered in calculating the Cash Bonus Pool in the
Fiscal Year in which any such acquisition is made.
The amount of the Cash Bonus Pool for any Fiscal Year only a part of
which is within the Term shall be equal to the amount of the Cash Bonus Pool
that would have been payable for such Fiscal Year had it been entirely within
the Term, times a fraction, the numerator of which is the number of days of such
Fiscal Year occurring during the Term, and the denominator of which is three
hundred and sixty-five (365).
The Executive shall be entitled to receive no less than 22% of the
Cash Bonus Pool for any Fiscal Year during the Term (or portion thereof, if
applicable), the actual percentage to be determined after the end of each Fiscal
Year by the Compensation Committee of the Board of Directors of the Corporation
(the "Maximum Bonus") calculated as follows: an amount equal to 60% of the
Maximum Bonus automatically; an amount up to 40% of the Maximum Bonus if
specific measurable objectives established by the Compensation Committee of the
Board of Directors of the Corporation and communicated to the Executive prior to
the beginning of the second quarter of such Fiscal Year are met.
(b) Time of Payment. The Cash Bonus Pool for any Fiscal Year during
the Term shall be determined after the close of such Fiscal Year as promptly as
practicable after completion of the Corporation's audited financial statements
for such Fiscal Year. If any payment is required to be made under Sections 10,
11, 12 or 13 hereof on the basis of the Cash Bonus Pool for any Fiscal Year, and
the Cash Bonus Pool for such Fiscal Year cannot be determined until after the
time that such payment is otherwise required to be made, then the payment of
that amount which is based upon the determination of the Cash Bonus Pool for
such
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Fiscal Year shall be deferred until after such time as the determination of the
Cash Bonus Pool for such Fiscal Year can reasonably be made, and such payment
shall be made as soon thereafter as practicable.
7. Bonuses. In addition to any amounts payable pursuant to Section 6
hereof, if the Executive is employed by the Corporation on the last day of a
Fiscal Year during the Term, the Corporation shall pay the Executive a bonus on
April 1 of the following Fiscal Year in the following amount: $37,500 on April
1, 2001, $150,000 on each of April 1, 2002 and 2003 and $410,000 on each of
April 1, 2004, 2005 and 2006.
8. Employee Benefits.
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(a) During the Term, the Corporation shall make available to the
Executive coverage and/or benefits under any and all medical insurance, life
insurance, long-term disability insurance and pension plans and other employee
benefit plans of the Corporation to the extent generally made available to
senior executives of the Corporation from time to time.
(b) During the Term, the Corporation shall make available to members
of the Executive's immediate family coverage and/or benefits under any and all
medical insurance, life insurance and disability insurance plans of the
Corporation to the extent generally made available to members of the immediate
family of other senior executives of the Corporation from time to time.
(c) During the Term the Corporation shall provide the Executive with
(i) $1,000,000 of life insurance in addition to that provided under Section 8(a)
hereof and (ii) the services of an automobile selected by him and a driver for
his use.
(d) The Executive shall be entitled to paid vacations (taken
consecutively or in segments), in accordance with the standard vacation policy
of the Corporation for senior executives, but in no event less than four (4)
weeks each calendar year during the Term. Such vacations shall be taken at times
consistent with the effective discharge of the Executive's duties.
(e) During the Term, the Executive shall be accorded office
facilities and secretarial assistance commensurate with his position as Chairman
of the Board of the Corporation and adequate for the performance of his duties
hereunder.
9. Consulting Fee. In the event that the Executive ceases to be an
employee of the Corporation for any reason, the Corporation will pay the
Executive a consulting fee in the following amounts on the following dates:
$37,500 on April 1, 2001, $150,000 on each of April 1, 2002 and 2003, $410,000
on April 1, 2004, 2005 and 2006 and $150,000 on each of April 1, 2007 and 2008.
No consulting fee shall be paid on any date on which a Section 7 Bonus is paid
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to Executive. The parties recognize and acknowledge that in consideration for
such consulting fee the Executive would render consulting services to the Board
of Directors of the Corporation at such times and locations as are mutually
convenient to the Corporation and the Executive. Executive's obligations to
provide such services shall not limit his ability to provide services to, or act
as an employee of, any other enterprise, subject to the provisions of Sections
14 and 15 hereof. The amounts provided in this Section 9 as such consulting fees
shall continue to be paid in the event of the death of the Executive or in the
event that the Executive has become Disabled (whether death or Disability
results in termination of employment or occurs thereafter) as termination
payments which the Corporation acknowledges are reasonable.
10. Termination--Death or Disability.
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(a) In the event of the termination of the Executive's employment
because of the death of the Executive during the Term, the Corporation shall pay
to any one or more beneficiaries designated by the Executive pursuant to notice
to the Corporation, or, failing such designation, to the Executive's estate, (i)
the unpaid Base Salary owing to the Executive through the end of the month of
his death and (ii) any unpaid Bonus for any completed Fiscal Year preceding the
death of the Executive, each in a lump sum within five (5) business days after
his death, (iii) a Bonus for the Fiscal Year in which such termination occurs,
equal to the Bonus (if any) that would have been paid for such Fiscal Year
pursuant to Section 6 hereof if no such termination had occurred, times a
fraction, the numerator of which is the number of months in such Fiscal Year
(but not in excess of twelve (12)) through the end of the month in which such
termination occurs, and the denominator of which is twelve (12) and (iv) any
unpaid Section 7 Bonus. The Corporation shall also promptly reimburse any unpaid
amounts due under Section 16 hereof as of the date of termination.
(b) In the event that the Executive has become Disabled, the
Corporation shall have the right to terminate the Executive's employment
hereunder by giving him written notice of such termination. Upon receipt of such
notice, the Executive's employment hereunder shall terminate. In the event of
such termination, the Corporation shall pay to the Executive (i) the unpaid Base
Salary owing to the Executive through the end of the month of such termination
and (ii) any unpaid Bonus for any completed Fiscal Year preceding such
termination, each in a lump sum within five (5) business days after such
termination, (iii) a Bonus for the Fiscal Year in which such termination occurs,
equal to the Bonus (if any) that would have been paid for such Fiscal Year
pursuant to Section 6 hereof if no such termination had occurred, times a
fraction, the numerator of which is the number of months in such Fiscal Year
(but not in excess of twelve (12)) through the end of the month in which such
termination occurs, and the denominator of which is twelve (12) and (iv) any
unpaid Section 7 Bonus. The Corporation shall also promptly reimburse any unpaid
amounts due under Section 16 hereof as of the date of termination.
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11. Termination for Cause by Corporation.
-----------------------------------------
(a) The Executive's employment hereunder may be terminated by the
Corporation for Cause upon compliance with the provisions of Section 11(b)
hereof. In the event that Executive's employment hereunder shall validly be
terminated by the Corporation for Cause pursuant to this Section 11, the
Corporation shall (i) promptly pay (x) the unpaid Base Salary owing to the
Executive to the date of termination and (y) any unpaid Bonus for any completed
Fiscal Year preceding such termination, (ii) pay in accordance with Section 7
hereof any unpaid Section 7 Bonus and (iii) promptly reimburse any unpaid
amounts due under Section 16 hereof as of the date of termination. Thereafter
the Corporation shall have no further obligations under this Agreement except
under Section 9 hereof. Upon termination of the Executive's employment hereunder
for Cause, the Executive shall nonetheless remain bound by the obligations
provided for in Sections 14 and 15 hereof.
(b) Termination for Cause shall be effected only by action of a
majority of the Board then in office (excluding the Executive) at a meeting duly
called and held upon at least ten (10) days' prior written notice to the
Executive specifying the particulars of the action or inaction alleged to
constitute "Cause" (and at which meeting the Executive and his counsel were
entitled to be present and given reasonable opportunity to be heard).
12. Termination for Good Reason by the Executive.
-------------------------------------------------
(a) Termination by Executive for Good Reason. The Executive's
employment hereunder may be terminated by the Executive for Good Reason by
providing written notice to the Corporation to such effect (such termination to
be effective on the date specified in such notice, which date shall not be more
than sixty (60) days nor less than thirty (30) days after the date of such
notice).
(b) Severance. If at any time the Executive terminates his
employment for Good Reason, then, in lieu of any other amounts that might
otherwise be payable hereunder (other than the consulting fee referred to in
Section 9 hereof), the Corporation shall promptly pay to the Executive (i) all
unpaid Base Salary owing to the Executive to the date of termination, (ii) any
unpaid Bonus for any completed Fiscal Year preceding such termination and (iii)
an amount equal to the Base Salary in effect on the date of termination plus an
amount equal to the Bonus, if any, which would have been payable to the
Executive in respect of the Fiscal Year in which such termination occurs times
the number of calendar months between the effective date of termination and the
date on which the Term would have expired but for such termination, but in no
event greater than twenty-four (24). The Corporation shall also promptly
reimburse any unpaid amounts due under Section 16 hereof as of the date of
termination and shall pay in accordance with Section 7 hereof any unpaid Section
7 Bonus.
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13. Early Termination. The Corporation and the Executive shall each
have the right, on not less than ninety (90) and not more than one hundred
twenty (120) days' notice, by action of the Board in the case of termination by
the Corporation, to terminate the Executive's employment, without Cause or Good
Reason, as the case may be, effective at the end of each Fiscal Year during the
Term. In the event that the employment of the Executive is so terminated, the
Corporation shall pay to the Executive (i) all unpaid Base Salary owing to the
Executive to the date of termination, (ii) any unpaid Bonus for any completed
Fiscal Year to the date of termination and (iii) an amount equal to the Base
Salary in effect on the date of termination times the number of calendar months
between the effective date of termination and the date on which the Term would
have expired but for such termination, but in no event greater than twenty-four
(24). The amount provided for in this Section 13 shall be paid promptly after
the end of the Fiscal Year in which the termination occurs. The Corporation
shall also promptly reimburse any unpaid amounts due under Section 16 hereof as
of the date of termination and shall pay in accordance with Section 7 hereof any
unpaid Section 7 Bonus.
14. Confidential Information. In addition to any other continuing
confidentiality obligation the Executive may have to the Corporation, and until
the end of the original Term, the Executive shall keep secret and retain in
strictest confidence, and shall not use for his benefit or the benefit of
others, any and all confidential information relating to the Corporation and its
subsidiaries, including, without limitation, customer lists, financial plans or
projections, pricing policies, marketing plans or strategies, business
acquisition or divestiture plans, new personnel acquisition plans, designs, and,
except in connection with the performance of his duties hereunder, the Executive
shall not disclose any such information to anyone outside the Corporation and
any of its subsidiaries, except as required by law (provided, to the extent
practicable, prior written notice thereof is given by the Executive to the
Corporation) or except with the Corporation's prior consent, unless such
information is known generally to the public or the trade through sources other
than the Executive's unauthorized disclosure.
15. Competitive Activity. The Executive hereby agrees that, during his
employment hereunder, and, following a termination of his employment, for the
balance of the original Term (if any) or two (2) years, if shorter, the
Executive shall not, without the prior consent of the Board (i) directly or
indirectly, engage or be interested in (as owner, partner, shareholder,
employee, director, officer, agent, consultant or otherwise), with or without
compensation, any business wherever located in the world engaged in the
manufacture, distribution, design, marketing or sale of women's apparel, if such
business is a material competitor of the Corporation, or (ii) induce or attempt
to persuade any employee of the Corporation or of any subsidiary of the
Corporation, or any person who was employed by the Corporation or any subsidiary
of the Corporation within the preceding six months, to leave the employ of the
Corporation or any subsidiary of the Corporation. The provisions of clause (i)
of the preceding sentence shall not apply in the case of a termination by the
Executive for Good Reason or by the
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Corporation without Cause. Nothing in this Section 15 shall prohibit the
Executive from acquiring or holding not more than five percent (5%) of any class
of publicly traded securities of any business.
16. Expenses. The Corporation shall reimburse the Executive for all
reasonable expenses incurred by the Executive in the performance of the
Executive's duties hereunder; provided, however, that, in connection with such
reimbursement, the Executive shall account to the Corporation for such expenses
in the manner customarily prescribed by the Corporation for its senior
executives.
17. Directors' and Officers' Insurance; Indemnification. The Executive
shall be provided with directors' and officers' insurance in connection with his
employment hereunder and service as a Director as contemplated hereby with such
coverage (including with respect to unpaid wages and taxes not remitted when
done) as shall be reasonably satisfactory to the Executive and with aggregate
limits of liability for all covered officers and directors of not less than
Thirty-Five Million Dollars ($35,000,000), and the Corporation shall maintain
such insurance in effect for the period of the Executive's employment hereunder
and for not less than five (5) years thereafter; provided, however, that, in the
event that the Corporation shall not have any publicly traded securities, the
Corporation may reduce the aggregate limits of liability for subsequent
occurrences for all covered officers and directors to Five Million Dollars
($5,000,000); and further provided, that in the event that the Corporation shall
not obtain such insurance (as applicable), it shall provide or cause the
Executive to be provided with indemnity (or a combination of indemnity and
directors' and officers' insurance) in connection with his employment hereunder
with substantially equivalent coverage and amounts, and the Corporation shall
maintain such indemnity (or combination of indemnity and directors' and
officers' insurance) or cause such indemnity (or such combination) to be
maintained for the period of the Executive's employment hereunder and for not
less than five (5) years thereafter.
18. No Duty to Mitigate. The Executive shall have no duty to mitigate
the severance amounts or any other amounts payable to the Executive hereunder,
and such amounts shall not be subject to reduction for any compensation received
by the Executive from employment in any capacity or other source following the
termination of Executive's employment with the Corporation and its subsidiaries.
19. Agreement with Three Cities. The Executive, Three Cities Fund II,
L.P. and Three Cities Offshore II C.V. have entered into an agreement in the
form annexed hereto as Exhibit A.
20. Amendments; No Waiver. This Agreement may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought. No failure on the part of either party to
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exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any partial exercise of any right hereunder preclude
any further exercise thereof.
21. Survival of Provisions. The provisions of Sections 7, 9, 14, 15,
27, 29 and 30(a) shall survive the termination or expiration of this Agreement
as provided therein. Such provisions are unique and extraordinary, which give
them a value peculiar to the Corporation and/or the Executive, as the case may
be, and cannot be reasonably or adequately compensated in damages for its loss
and any breach by either party of such provisions shall cause the other
irreparable injury and damage. Therefore, the Corporation and Executive, in
addition to all other remedies available to them, shall be entitled to
injunctive and other available equitable relief in any court of competent
jurisdiction to prevent or otherwise restrain a breach of such provisions for
the purposes of enforcing such provisions.
22. Withholding. The Corporation shall be entitled to withhold from any
and all amounts payable to the Executive hereunder such amounts as may from time
to time be required to be withheld pursuant to applicable tax laws and
regulations.
23. Succession, Assignability and Binding Effect.
(a) The Corporation will require any successor or successors
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Corporation
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Corporation would be required to perform it if no
such succession had taken place. Failure of the Corporation to obtain such
agreement prior to the effectiveness of any such succession shall constitute
Good Reason for resignation by the Executive.
(b) This Agreement shall inure to the benefit of and shall be
binding upon the Corporation and its successors and permitted assigns and upon
the Executive and his heirs, executors, legal representatives, successors and
permitted assigns; provided, however, that neither party may assign, transfer,
pledge, encumber, hypothecate or otherwise dispose of this Agreement or any of
its or his rights hereunder without the prior written consent of the other
party, and any such attempted assignment, transfer, pledge, encumbrance,
hypothecation or other disposition without such consent shall be null and void
and without effect.
24. Headings. The paragraph headings contained herein are included
solely for convenience of reference and shall not control or affect the meaning
or interpretation of any of the provisions of this Agreement.
25. Notices. Any notices or other communications hereunder by either
party shall be in writing and shall be deemed to have been duly given if
delivered personally to the other party
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or, if sent by registered or certified mail, upon receipt, to the other party at
his or its address set forth at the beginning of this Agreement or at such other
address as such other party may designate in conformity with the foregoing.
26. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to the principles thereof relating to the conflict of laws.
27. Legal Fees and Expenses. In order to induce the Executive to enter
into this Agreement and to provide the Executive with reasonable assurance that
the purposes of this Agreement shall not be frustrated by the cost of its
enforcement, the Corporation shall pay and be solely responsible for any
attorneys' fees and expenses and court costs incurred by the Executive in
connection with the negotiation of this Agreement and as a result of the failure
by the Corporation to perform this Agreement or any provision hereof to be
performed by it or in connection with any action which may be brought, by or in
the name or for the benefit of the Corporation or any subsidiary contesting the
validity or enforceability of this Agreement or any provision hereof to be
performed by the Corporation, which action shall have been dismissed by a final,
nonappealable court order.
28. Opportunity to Review. The Executive acknowledged that he has been
given the opportunity to discuss this Agreement, including Section 29, with his
private legal counsel and has availed himself of that opportunity to the extent
he wishes to do so.
29. Arbitration.
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(a) Disputes Subject to Arbitration. In the event that the
Corporation terminates the Executive's employment on the grounds set forth in
clause (iii) of the definition of "Cause", the Corporation and the Executive
mutually consent to the resolution by arbitration of any dispute between the
Corporation and the Executive as to whether such Cause has occurred (a
"Dispute"). Unless the Corporation and the Executive otherwise agree, no other
disputes, issues, claims or controversies arising out of the Executive's
employment (or its termination), or any other matter whatsoever, shall be
submitted to or resolved by arbitration.
(b) Arbitration Procedures.
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(i) The Corporation and the Executive agree that, except as
provided in this Agreement, any arbitration shall be in accordance with
the then current Model Employment Arbitration Procedures of the AAA
before an arbitrator who is licensed to practice law in the state in
which the arbitration is convened (the "Arbitrator"). The arbitration
shall take place in or near the city in which the Executive is or was
last employed by the Corporation.
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(ii) Upon designation as a Dispute, the AAA shall give each
party a list of eleven (11) arbitrators drawn from its panel of labor
and employment arbitrators. The Corporation and the Executive may
strike all names on the list which it or he deems unacceptable. If only
one common name remains on the lists of both parties, said individual
shall be designated as the Arbitrator. If more than one common name
remains on the lists of both parties, the parties shall strike names
alternatively until only one remains. If no common name remains on the
lists of both parties, the AAA shall furnish an additional list and the
parties shall alternate striking names on such second list until an
arbitrator is selected.
(iii) The Arbitrator shall apply the law of the State of New
York applicable to contracts made and to be performed wholly in that
state (without giving effect to the principles thereof relating to
conflicts of law). The Federal Rules of Evidence shall apply. The
Arbitrator, and not any federal, state or local court or agency, shall
have exclusive authority to resolve any dispute relating to the
interpretation, applicability or formation of the term "Cause". The
Arbitrator shall render a decision within thirty (30) days of the date
upon which the Arbitrator is selected pursuant to Section 29(b)(ii),
which decision shall be final and binding upon the parties. In the
event that the Arbitrator decides that Material Insubordination has (x)
occurred, then the Executive's employment shall be deemed to have been
terminated for Cause pursuant to Section 11(a) hereof or (y) not
occurred, then the Executive's employment shall be deemed to have been
terminated without Cause pursuant to Section 13 hereof.
(iv) The Arbitrator shall have jurisdiction to hear and rule
on pre-hearing disputes and is authorized to hold prehearing
conferences by telephone or in person as the Arbitrator deems
necessary. The Arbitrator shall have the authority to entertain a
motion to dismiss and/or a motion for summary judgment by any party and
shall apply the standards governing such motions under the Federal
Rules of Civil Procedure.
(v) Either party, at his its expense, may arrange for and pay
the costs of a court reporter to provide a stenographic report of
proceedings.
(vi) Either party, upon request at the close of hearing, shall
be given leave to file a post-hearing brief. The time for filing such a
brief shall be set by the Arbitrator.
(vii) Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this Section 29.
Except as otherwise provided in this Section 29, both the Corporation
and the Executive agree that neither such party shall
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initiate or prosecute any lawsuit or administrative action in any way
related to any Dispute covered by this Section 29.
(viii) The Arbitrator shall render an opinion in the form
typically rendered in labor arbitrations.
(c) Arbitration Fees and Costs. The Corporation and the Executive
shall equally share the fees and costs of the Arbitrator. Each party shall
deposit funds or post other appropriate security for his or its share of the
Arbitrator's fee, in an amount and manner determined by the Arbitrator, ten (10)
days before the first day of hearing. Each party shall pay for his or its own
costs and attorneys' fees, if any. However, if any party prevails on a statutory
claim that affords the prevailing party attorneys' fees, the Arbitrator may
award reasonable fees to the prevailing party.
(d) Law Governing. The parties agree that the arbitration provisions
set forth in this Section 29 shall be governed by the Federal Arbitration Act, 9
▇.▇.▇.▇▇.▇▇. 1-16, ("FAA"). The parties further agree that all Disputes, whether
arising under state or federal law, shall be subject to the FAA, notwithstanding
any state or local laws to the contrary.
30. Other Matters.
(a) Health Insurance. So long as the annual cost thereof does not
exceed Twenty Thousand Dollars ($20,000), and unless the employment of the
Executive shall be terminated by the Corporation for Cause or by the Executive
without Good Reason, the Corporation shall continue in effect, for the rest of
the Executive's life, the health insurance provided for the Executive as of the
Effective Date.
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(b) Prior Employment Agreement. The Prior Employment Agreement is
hereby terminated as of the Effective Date, except that the provisions of
Section 26(b) of such employment agreement in respect of the Executive's
employment contract with Old ▇▇▇▇▇▇ ▇▇▇ shall survive and except that such
termination shall not affect the right of Executive to receive any accrued but
unpaid Base Salary and any other accrued but unpaid amounts under Section 6
thereof as of the date of termination.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
THE ▇▇▇▇▇▇ ▇▇▇ COMPANY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive
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