EXHIBIT 4.2
XXXXXX XXXXXXX EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS AGREEMENT made effective as of the 13th day of April, 1999 (the
"Effective Date") by and between Happy Kids Inc., a New York corporation with
its principal place of business at 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxx Xxxx 00000 (the "Company"), and Xxxxxx Xxxxxxx, an individual residing at 00
Xxxxx Xxxxxxx Xxxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to secure the employment of the Employee
in accordance with the provisions of this Agreement; and
WHEREAS, the Employee desires and is willing to accept employment with the
Company in accordance herewith.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. TERM. The Company hereby agrees to employ the Employee and the Employee
hereby agrees to serve the Company pursuant to the terms and conditions of this
Agreement as a Vice President of the Company and President of the Glasgow
Division of the Company (the "Division"), or in a position at least commensurate
therewith in all material respects, for a term commencing on the Effective Date
hereof and expiring on the fifth anniversary thereof (the "Term"), provided that
the Employee is elected to such office, or a comparable or higher office, at
each annual meeting of the Board of Directors of the Company (the "Board of
Directors") during the Term of this Agreement. If the Employee shall not be so
elected at any such annual
meeting of the Board of Directors, the Employee's employment hereunder shall
forthwith terminate and the Company shall be obligated to compensate the
Employee in accordance with Section 6(a) of this Agreement.
2. POSITIONS AND DUTIES.
(a) Duties. The Employee's duties hereunder shall be those which
shall be prescribed from time to time by the Board of Directors in accordance
with the bylaws of the Company and shall include such executive duties, powers
and responsibilities as customarily attend the office of Vice President of a
company comparable to the Company. The Employee will hold, in addition to the
offices of Vice President of the Company and President of the Division, such
other executive offices in the Company and its subsidiaries to which he may be
elected, appointed or assigned by the Board of Directors from time to time and
will discharge such executive duties in connection therewith. During the
employment period, the Employee's position (including status, offices and
reporting requirements) and authority shall be at least commensurate in all
material respects with the most significant of those mutually agreed upon by the
Employee and the Company as of the Effective Date; provided, however, that,
consistent with the Company's policy with respect to all employees, Employee
shall report exclusively to Xxxx Xxxxx, Xxxx Xxxxx, Xxxxx Xxxx and the Board of
Directors of the Company. The Employee shall devote his full working time,
energy and skill (reasonable absences for vacations and illness excepted), to
the business of the Company as is necessary in order to perform such duties;
provided, however, that notwithstanding any provision in this Agreement to the
contrary, the Employee shall not be precluded from devoting reasonable periods
of time required for: (i) owning and managing personal investments including
real estate and (ii) serving as a member of boards of
-2-
companies or organizations which have been approved by the Board of Directors so
long as such memberships or activities do not interfere with the performance of
the Employee's duties hereunder.
(b) Board Nomination. So long as the Employee is serving as Vice
President of the Company and President of the Division and the Company is
subject to the reporting requirements of Securities Exchange Act of 1934, as
amended, the Company will use its commercially reasonable efforts to obtain the
nomination and election of the Employee as a director of the Company. In the
event that the Employee is elected as a director of the Company, the Employee
shall perform all duties incident to such directorship. The Company shall
maintain director and officer liability insurance and shall indemnify Employee
for all acts or omissions taken as an officer or director of the Company to the
fullest extent permitted by law.
3. COMPENSATION. During the Term of this Agreement, the Employee shall
receive, for all services rendered to the Company hereunder, the following
(hereinafter referred to as "Compensation"):
(a) Base Salary. For the Term hereof, the Employee shall be paid an
annual base salary equal to at least two hundred fifty thousand dollars
($250,000.00). The Employee's annual base salary shall be payable in equal
installments in accordance with the Company's general salary payment policies
but no less frequently than monthly.
(b) Divisional Profits. Subject to the provisions of Section 3(i),
3(j) and 3(k), for the Term, the Employee shall also receive, in quarterly
payments, subject to annual adjustment, an amount equal to ten percent (10%) of
the annual pre-tax profits (the "Divisional Profits") derived by the Company
directly attributable to: (i) sales of merchandise produced
-3-
under licenses assigned to the Company pursuant to that certain Asset Purchase
Agreement dated the date hereof (the "Asset Purchase Agreement") by and among
the Company, on the one hand, and Employee and D. Glasgow & Sons, Inc., on the
other hand; (ii) sales of merchandise produced under any of the Company's other
license arrangements that are assigned to the Division and which shall include,
without limitation, sales of merchandise produced under the Company's license
arrangements with the World Wrestling Federation that relate to orders written
up after the date of this Agreement; and (iii) any merchandise produced by the
Seller (as defined in the Asset Purchase Agreement and including any successor
of, or replacement or substitute for, Seller, approved in writing by Employee
and the Company), in accordance with the terms of that certain Letter Agreement,
dated the date hereof, by and among the Company, the Seller and the Employee
(the "Division Sales"). Such Divisional Profits shall be calculated using the
Company's usual and customary accounting practices in accordance with generally
accepted accounting principles; provided, however, that: (i) all cost
allocations (including for example, but not limited to, back office expenses,
interest charges, factoring charges and warehousing charges) used in calculating
Divisional Profits shall be no greater than the actual cost of such allocations
to the Company and shall be proportionate to total sales by the Company; and
(ii) any and all warehousing costs and expenses incurred by the Company,
specifically identified as incurred with respect to Division Sales shall be
fully allocated and charged to the Division when calculating Divisional Profits.
(c) Import Sales Profits. Subject to the provisions of Section 3(j)
and 3(k), the Employee shall further receive, in quarterly payments, subject to
annual adjustment, an amount (the "Import Sales Profits") equal to a percentage
(the "Percentage"), as set forth below,
-4-
of all annual net sales (gross sales less allowances, discounts and returns) of
the Division that are derived from sales of merchandise that is: (i) produced
under licenses assigned to the Company pursuant to the Asset Purchase Agreement;
or (ii) sales of merchandise produced under any of the Company's other license
arrangements that are assigned to the Division and which shall include, without
limitation, sales of merchandise produced under the Company's license
arrangements with the World Wrestling Federation that relate to orders written
up after the date of this Agreement, provided that: (A) such net sales have
generated a gross margin (net of royalties) (the "Import Sales Gross Margin")
for the Company, when taken as a whole, equal to the Import Sales Gross Margin
associated with each respective Percentage, as set forth below; (B) such net
sales are directly attributable to import production; and (C) such net sales are
deemed to be a "full complete package of finished garment," as such term is
generally understood in the children's clothing industry.
For purposes of clarification, the Import Sales Gross Margin shall be
arrived at as follows:
(i) gross sales
less (ii) the sum of allowances, discounts and returns related to
such gross sales
equals (iii) net sales
less (iv) cost of goods sold related to such net sales (which
amount shall be calculated in accordance with generally
accepted accounting principles and shall include, among
other costs, the royalty payments associated with the
sale of such products)
equals (v) Import Sales Gross Margin.
-5-
For the purposes of this Section 3(c), the following Percentages shall
apply:
Range of Import Sales Gross Margin Percentage
---------------------------------- ----------
25% or greater 2.0%
24% or greater, but less than 25% 1.5%
23% or greater, but less than 24% 1.0%
10% or greater, but less than 23% 0.5%
less than 10% 0.0%
(d) Bonuses. The Employee shall also be eligible for bonuses
commensurate with other executive officers. The amount of such bonuses, if any,
shall be solely within the discretion of the Board of Directors or, if formed,
the Compensation Committee thereof.
(e) Incentive Compensation. The Employee shall also be eligible for
awards from the Company's incentive compensation plans, including without
limitation any stock option plans, applicable to high level executive officers
of the Company or to key employees of the Company or its subsidiaries, in
accordance with the terms thereof and on a basis commensurate with his position
and responsibilities.
(f) Benefits. The Employee and his "dependents," as that term may be
defined under the applicable benefit plan(s) of the Company, shall be included,
to the extent eligible thereunder, in any and all plans, programs and policies
which provide benefits for employees and/or executive officers and directors and
their dependents. Such plans, programs and policies may include 401(k), pension,
health care insurance, long-term disability plans, life insurance, supplemental
disability insurance, supplemental life insurance, holidays and other similar or
comparable benefits made available to the Company's employees.
(g) Expenses. Subject to and in accordance with the Company's
policies and procedures, the Employee hereby is authorized to incur, and, upon
presentation of itemized
-6-
accounts, shall be reimbursed promptly by the Company for, any and all
reasonable and necessary business-related expenses, which expenses are incurred
by the Employee on behalf of the Company or any of its subsidiaries.
(h) Calculation of Compensation. The calculation of all Compensation
amounts due to Employee under this Agreement shall be determined first by those
uninterested, outside directors named to the Company's Compensation Committee
(and in the event the Company ceases to have formed a Compensation Committee,
then by those uninterested, outside members of the Company's Board of
Directors); and second, if such uninterested outside directors cannot reach
agreement that is mutually acceptable to each of the Employee and the Company,
then by an independent third party auditor, to be mutually acceptable to the
Employee and the Company, whose determination shall be conclusive, subject to
remedies Employee may otherwise have under this Agreement. Any and all costs
incurred in resolving disputes regarding the calculation of Compensation under
this Section 3(h) shall be borne by the non-prevailing party.
(i) It is understood and agreed that any and all sales for which
Employee is entitled to an Import Sales Profit pursuant to Section 3(c) hereof
shall not be included in the calculation of any Divisional Profits owed Employee
under Section 3(b) hereof.
(j) The estimated quarterly amounts paid Employee during each
calendar year with respect to Divisional Profits or Import Sales Profits shall
be adjusted at the end of each such calendar year to reflect the cumulative
annual Divisional Profits or Import Sales Profits amounts actually owed Employee
for each respective calendar year. Company agrees to promptly remit to Employee
additional amounts owed Employee, if any, pursuant to such annual calculations
and
-7-
Employee agrees that the Company may, at its option, require Employee to
promptly remit to Company any amount owed Company pursuant to such annual
calculations or to offset future payments of Divisional Profits or Import Sales
Profits owed Employee with respect thereto.
(k) The Company hereby agrees that to the extent Employee is owed
Divisional Profits or Import Sales Profits hereunder, the Company will pay, as a
reduction to such amounts owed Employee, those expenses (the "Expenses") that
are required to be incurred by Employee pursuant to Section 5 of that certain
Consent to Assignment and Assumption of NBA License, dated April 8, 1999 (the
"NBA License"), when and as due. In the event the Company enters into cross
licenses with respect to the NBA License, the Company agrees to discuss with
Employee the sharing of any Expenses subsequently incurred by Employee.
4. ABSENCES. The Employee shall be entitled to vacations, absences because
of illness or other incapacity, and such other absences, whether for holiday,
personal time, or for any other purpose, as set forth in the Company's
employment manual or current procedures and policies, as the case may be, as
same may be amended from time-to-time.
5. TERMINATION. In addition to the events of termination and expiration of
this Agreement provided for in Section 1 hereof, the Employee's employment
hereunder may be terminated only as follows:
(a) Without Cause. The Company may terminate the Employee's employment
hereunder without Cause only upon action by the Board of Directors, and upon no
less than sixty (60) days prior written notice to the Employee. The Employee may
terminate employment hereunder without Cause upon no less than sixty (60) days
prior written notice to the Company.
-8-
(b) For Cause, by the Company. The Company may terminate the Employee's
employment hereunder for Cause immediately and with prompt notice to the
Employee. "Cause" for termination shall mean the following conduct of the
Employee:
(1) A material breach of Section 8 of this Agreement by the Employee,
or Employee's failure to devote his full working time, energy and skill
(reasonable absences for vacations and illness excepted), as required by and
subject to Section 2(a) hereof, to the business of the Company;
(2) Willful misconduct as an employee of the Company involving: (i)
misappropriating any funds or property of the Company; (ii) attempting to obtain
any personal profit from any transaction in which the Employee has an interest
which is adverse to the Company; and (iii) any other knowing and willful act
that materially financially injures the Company;
(3) Conviction of, or a plea of guilty or nolo contendre to a felony
(other than traffic violations).
(c) For Good Reason by Employee. The Employee may terminate employment
hereunder for good reason immediately and with prompt notice to the Company.
"Good reason" for termination by the Employee shall include, but is not limited
to, the following conduct of the Company:
(1) Material breach of any provision of this Agreement by the Company,
which breach, if susceptible to cure, shall not have been cured by the Company
within thirty (30) days of receipt of written notice of said breach;
-9-
(2) Failure to maintain the Employee in a position commensurate with
that referred to in Section 2 of this Agreement without his consent; or
(3) The assignment to the Employee without his consent of any duties
inconsistent with the Employee's position, authority, duties or responsibilities
as contemplated by Section 2 of this Agreement, the relocation of Employee to a
location one hundred (100) miles or more from the Company's offices at 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or any other action by the Company which
results in a diminution of such position, authority, duties or responsibilities,
excluding for this purpose any isolated action not taken in bad faith and which
is promptly remedied by the Company after receipt of notice thereof given by the
Employee.
(d) Death. The period of active employment of the Employee hereunder shall
terminate automatically in the event of his death.
(e) Disability. In the event that the Employee shall be unable to perform
duties hereunder for a period of one hundred eighty (180) days in any calendar
year by reason of disability as a result of illness, accident or other physical
or mental incapacity or disability, as determined by an independent physician
reasonably acceptable to Company and Employee, the Company may, in its
discretion, by giving written notice to the Employee, terminate the Employee's
employment hereunder as long as the Employee is still disabled on the effective
date of such termination.
(f) Mutual Agreement. This Agreement may be terminated at any time by
mutual agreement of the Employee and the Company.
6. COMPENSATION IN THE EVENT OF TERMINATION. In the event that the
Employee's employment pursuant to this Agreement terminates prior to the end of
the Term of this
-10-
Agreement because he is not reelected pursuant to Section 1 or for a reason
provided in Section 5 hereof, the Company shall pay the Employee compensation as
set forth below:
(a) Employee not Elected by Board of Directors; By Employee for Good
Reason; By Company Without Cause . In the event that the Employee's employment
hereunder is terminated: (i) because the Employee is not elected to the offices
of Vice President of the Company and President of the Division, or in a position
at least commensurate therewith in all material respects, at any annual meeting
of the Company's Board of Directors during the Term of this Agreement, as
contemplated by Section 1 hereof and without Employee's consent; (ii) by the
Employee for good reason pursuant to Section 5(c) hereof; or (iii) by the
Company without Cause, then the Company shall continue to pay or provide, as
applicable, the following compensation to the Employee for the remainder of the
unexpired Term:
(1) Base Salary, Divisional Profits and Import Sales Profits and all
other Compensation and expenses; and
(2) Continuing coverage for the Employee and his eligible dependents
under all of the Company's benefit plans, programs and policies in effect as of
the date of termination.
Such compensation shall continue to be paid or provided, as
applicable, in the same manner as before termination, and for a period of time
ending on the date when the Term of this Agreement would otherwise have expired
in accordance with Section 1 of this Agreement. The Employee shall not be
required to mitigate the amount of any payment provided for in this Section 6(a)
by seeking employment or otherwise, nor shall any amounts received
-11-
from employment or otherwise by the Employee offset in any manner the
obligations of the Company hereunder.
(b) By Company Upon Termination of Agreement Due to Employee's Death or
Disability During The Term. In the event of the Employee's death or if the
Company shall terminate the Employee's employment hereunder for disability
pursuant to Section 5(e) hereof during the Term, Company shall pay Employee a
lump sum payment of $2.0 million; provided, however, that such payment to
Employee pursuant to this Section 6(b) is contingent upon Employee qualifying
for such insurance coverage and Company's ability to obtain, at commercially
reasonable rates for an individual of Employees' age and in good health, term
life and disability insurance covering the Employee, in the face amount of $2.0
million. Upon termination of Employee's employment hereunder, due to the death
or disability of Employee, no other Compensation shall be owed by the Company to
the Employee. The Company covenants and agrees to use commercially reasonable
efforts to obtain insurance coverage under this Section 6(b) as soon as
practicable upon the execution hereof; provided, however, that in the event that
Employee is deceased or becomes disabled prior to the time such insurance is in
effect, Company shall not be liable to the Employee hereunder.
(c) By Company For Cause or By Employee Without Good Reason. In the event
that (i) the Company shall terminate the Employee's employment hereunder for
Cause pursuant to Section 5(b) hereof or (ii) the Employee shall terminate
employment hereunder without "good reason" as provided in Section 5(c) hereof,
the Company shall not be obligated to pay the Employee any compensation except
for salary and other Compensation which may have
-12-
been earned and are due and payable on goods which have been booked and/or
shipped but which have not been paid as of the date of termination.
7. EFFECT OF TERMINATION. In the event of expiration or early termination
of this Agreement as provided herein, neither the Company nor the Employee shall
have any remaining duties or obligations hereunder except that:
(a) The Company shall:
(1) Pay the Employee's accrued salary and any other accrued benefits
under Section 3 hereof;
(2) Reimburse the Employee for expenses already incurred in accordance
with Section 3(g) hereof;
(3) Pay or otherwise provide for any benefits, payments or
continuation or conversion rights in accordance with Section 6 under any benefit
plan of which the Employee or any of his dependents is or was a participant; and
(4) Pay the Employee or his beneficiaries the Compensation due
pursuant to Section 6 hereof; and
(b) To the extent provided for herein, the Employee shall remain bound by
the terms of Section 8 hereof and Exhibit A attached hereto.
8. RESTRICTIVE COVENANT. (a) The Employee acknowledges and agrees that he
has access to secret and confidential information of the Company and its
subsidiaries and that the following restrictive covenant is necessary to protect
the interests and continued success of the Company. Except as otherwise
expressly consented to in writing by the Company, until the termination of the
Employee's employment (for any reason and whether such employment was
-13-
under this Agreement or otherwise) and thereafter for twenty-four (24) months
(the "Restricted Period"), the Employee shall not, directly or indirectly,
acting as an employee, owner, shareholder, partner, joint venturer, officer,
director, agent, salesperson, consultant, advisor, investor or principal of any
corporation or other business entity:
(i) engage, in any state or territory of the United States of America
or other country where the Company is doing business (determined as of the date
the Employee's employment with the Company terminates), in direct or indirect
competition with the business conducted by the Company or activities which the
Company plans to conduct within one (1) year of termination (determined as of
the date the Employee's employment with the Company terminates) of which
Employee has knowledge;
(ii) request or otherwise attempt to induce or influence, directly or
indirectly, any present customer, supplier or licensor, or prospective customer,
supplier or licensor, of the Company, or other persons sharing a business
relationship with the Company, to cancel, limit or postpone their business with
the Company, or otherwise take action which might be to the material
disadvantage of the Company; or
(iii) hire or solicit for employment, directly or indirectly, or
induce or actively attempt to influence, any Employee of the Company or any
Affiliate, as such term is defined in the Securities Act of 1933, as amended, to
terminate his or her employment or discontinue such person's consultant,
contractor or other business association with the Company.
(b) In the event that either the geographical area or the Restrictive
Period set forth in Section 8(a) of this Agreement is deemed to be unreasonably
restrictive in any court
-14-
proceeding, the court may reduce such geographical area and Restrictive Period
to the extent which it deems reasonable under the circumstances.
(c) Nothing in this Section 8, whether express or implied, shall prevent
the Employee from being a holder of securities of a company whose securities are
registered under Section 12 of the Securities Exchange Act of 1934, as amended;
provided, however, that the Employee holds of record and beneficially less than
five percent (5%) of the votes eligible to be cast generally by holders of
securities of such company for the election of directors.
(d) The Employee, as a condition of his continued employment, acknowledges
and agrees that he has reviewed and will continue to be bound by all of the
provisions set forth in Exhibit A attached hereto, which is incorporated herein
by reference and made a part hereof as though fully set forth herein, during the
Term of this Agreement, and any time hereafter.
(e) Employee acknowledges and agrees that in the event of a breach or
threatened breach of the provisions of this Section 8 by Employee the Company
may suffer irreparable harm and therefore, the Company shall be entitled, to the
extent permissible by law, to obtain immediate injunctive relief restraining the
Employee from conduct in breach or threatened breach of the covenants contained
in this Section 8. Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of damages from the Employee.
9. RESOLUTION OF DIFFERENCES OVER BREACHES OF AGREEMENT. Except as
otherwise provided herein, any controversy or claim arising out of, or relating
to, this Agreement, or the breach hereof, shall be reviewed in the first
instance in accordance with the Company's internal review procedures, if any,
with recourse thereafter--for temporary or preliminary injunctive relief
-15-
only--to the courts having jurisdiction thereof, and if any relief other than
injunctive relief is sought, then to arbitration in New York County, New York in
accordance with the rules of the American Arbitration Association, and judgment
upon the award rendered by the Arbitrator(s) may be entered in any court having
jurisdiction thereof.
10. WAIVER. The waiver by a party hereto of any breach by the other party
hereto of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party hereto.
11. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company, and the Company shall be
obligated to require any successor to expressly assume its obligations
hereunder. This Agreement shall inure to the benefit of and be enforceable by
the Employee or his legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. The Employee may not
assign any of his duties, responsibilities, obligations or positions hereunder
to any person and any such purported assignment by him shall be void and of no
force and effect.
12. NOTICES. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if personally delivered or when
sent by first class certified or registered mail, postage prepaid, return
receipt requested--in the case of the Employee, to his residence address as set
forth below, and in the case of the Company, to the address of its principal
place of business as set forth below, in care of the Board of Directors--or to
such other person or at such other address with respect to each party as such
party shall notify the other in writing.
-16-
13. CONSTRUCTION OF AGREEMENT.
(a) Governing Law. This Agreement shall be governed by and its provisions
construed and enforced in accordance with the internal laws of the State of New
York without reference to its principles regarding conflicts of law.
(b) Severability. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
(c) Headings. The descriptive headings of the several paragraphs of this
Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement.
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties concerning the Employee's employment and all promises, representations,
understandings, arrangements and prior agreements on such subject are merged
herein and superseded hereby. The provisions of this Agreement may not be
amended, modified, repealed, waived, extended or discharged except by an
agreement in writing signed by the party against whom enforcement of any
amendment, modification, repeal, waiver, extension or discharge is sought. No
person acting other than pursuant to a resolution of the Board of Directors
shall have authority on behalf of the Company to agree to amend, modify, repeal,
waive, extend or discharge any provision of this Agreement or anything in
reference thereto or to exercise any of the Company's rights to terminate or to
fail to extend this Agreement.
* * * * * *
-17-
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and attested by its duly authorized officers, and the Employee has set his hand,
all as of the day and year first above written.
ATTEST: Happy Kids Inc.
/s/ Xxxxxx Xxxxxx By:/s/ Xxxx X. Xxxxx
------------------------------ -----------------------------------
Xxxxxx Xxxxxx, Chief Financial Xxxx X. Xxxxx, President
Officer
Address:
-------------------------------
-------------------------------
-------------------------------
WITNESS: EMPLOYEE
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxx Xxxxxxx
------------------------------ ---------------------------------------
Xxxxxx Xxxxxxx
Address:
-------------------------------
-------------------------------
-------------------------------
-18-
EXHIBIT A
Happy Kids Inc.
EMPLOYEE'S
INVENTION ASSIGNMENT AND CONFIDENTIALITY
AGREEMENT
In consideration of my employment or continued employment by Happy Kids
Inc., a New York corporation or any subsidiary or parent corporation thereof
(the "Company"), I hereby represent and agree as follows:
1. I understand that the Company is engaged in the business of designing
and distributing children's apparel, and that I may have access to or acquire
information with respect to Confidential Information (as defined below),
including processes and methods, development tools, scientific, technical and/or
business innovations.
2. DISCLOSURE OF INNOVATIONS. I agree to disclose in writing to the
Company all inventions, improvements and other innovations of any kind that I
may make, conceive, develop or reduce to practice, alone or jointly with others,
during the term of my employment with the Company, whether or not they are
related to my work for the Company and whether or not they are eligible for
patent, copyright, trademark, trade secret or other legal protection
("Innovations"). Examples of Innovations shall include, but are not limited to,
discoveries, research, inventions, formulas, techniques, processes, tools,
know-how, marketing plans, new product plans, production processes, advertising,
packaging and marketing techniques and improvements to computer hardware or
software.
3. ASSIGNMENT OF OWNERSHIP OF INNOVATIONS. I agree that all Innovations
will be the sole and exclusive property of the Company and I hereby assign all
of my rights, title or interest in the Innovations and in all related patents,
copyrights, trademarks, trade secrets, rights of priority and other proprietary
rights to the Company. At the Company's request and expense, during and after
the period of my employment with the Company, I will assist and cooperate with
the Company in all respects and will execute documents, and, subject to my
reasonable availability, give testimony and take further acts requested by the
Company to obtain, maintain, perfect and enforce for the Company patent,
copyright, trademark, trade secret and other legal protection for the
Innovations. I hereby appoint the President and Chief Executive Officer of the
Company as my attorney-in-fact to execute documents on my behalf for this
purpose.
4. PROTECTION OF CONFIDENTIAL INFORMATION OF THE COMPANY. I understand
that my work as an employee of the Company creates a relationship of trust and
confidence between myself and the Company. During and after the period of my
employment with the Company, I will not use or disclose or allow anyone else to
use or disclose any "Confidential Information" (as defined below) relating to
the Company, its products, suppliers or customers except as may
-A1-
be necessary in the performance of my work for the Company or as may be
authorized in advance by appropriate officers of the Company. "Confidential
Information" shall include innovations, methodologies, processes, tools,
business strategies, financial information, forecasts, personnel information,
customer lists, trade secrets and any other non-public technical or business
information, whether in writing or given to me orally, which I know or have
reason to know the Company would like to treat as confidential for any purpose,
such as maintaining a competitive advantage or avoiding undesirable publicity. I
will keep Confidential Information secret and will not allow any unauthorized
use of the same, whether or not any document containing it is marked as
confidential. These restrictions, however, will not apply to Confidential
Information that has become known to the public generally through no fault or
breach of mine or that the Company regularly gives to third parties without
restriction on use or disclosure. Upon termination of my work with the Company,
I will promptly deliver to the Company all documents and materials of any nature
pertaining to my work with the Company and I will not take with me any documents
or materials or copies thereof containing any Confidential Information.
5. OTHER AGREEMENTS. I represent that my performance of all the terms of
this Agreement and my duties as an employee of the Company will not breach any
invention assignment agreement, confidential information agreement,
non-competition agreement or other agreement with any former employer or other
party. I represent that I have not and will not bring with me to the Company or
use in the performance of my duties for the Company any documents or materials
of a former employer that are not generally available to the public.
6. DISCLOSURE OF THIS AGREEMENT. I hereby authorize the Company to notify
others, including but not limited to customers of the Company and any of my
future employers, of the terms of this Agreement and my responsibilities
hereunder.
7. INJUNCTIVE RELIEF. I understand that in the event of a breach or
threatened breach of this Agreement by me the Company may suffer irreparable
harm and monetary damages alone would not adequately compensate the Company. The
Company will therefore be entitled to injunctive relief to enforce this
Agreement.
8. ENFORCEMENT AND SEVERABILITY. I acknowledge that each of the provisions
in this Agreement are separate and independent covenants. I agree that if any
court shall determine that any provision of this Agreement is unenforceable with
respect to its term or scope such provision shall nonetheless be enforceable by
any such court upon such modified term or scope as may be determined by such
court to be reasonable and enforceable. The remainder of this Agreement shall
not be affected by the unenforceability or court ordered modification of a
specific provision.
9. GOVERNING LAW. I agree that this Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
10. SUPERSEDING AGREEMENT. I understand and agree that this Agreement
contains the entire agreement of the parties with respect to subject matter
hereof and supersedes all previous agreements and understandings between the
parties with respect to its subject matter.
-A2-
11. ACKNOWLEDGMENTS. I acknowledge that I have read this agreement, was
given the opportunity to ask questions and sufficient time to consult an
attorney and I have either consulted an attorney or affirmatively decided not to
consult an attorney. I understand that this agreement does not alter the terms
of an executed Employment Agreement with the Company, or in the absence of an
Employment Agreement, this Agreement does not alter my status as an employee at
will and that my employment may be terminated at any time, with or without
cause. I also understand that my obligations under this Agreement survive the
termination of my employment with the Company.
*.*.*.*.*.*.*.*.*.*
-A3-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written below.
Date: April 13, 1999 /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name of Employee: Xxxxxx Xxxxxxx
Address:
-------------------------------
-------------------------------
-------------------------------
Happy Kids Inc.
Date: April 13, 1999 By:/s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx, President
-A4-
