EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made between SIGNAL APPAREL
COMPANY, INC., an Indiana corporation, with its principal
offices at 000-X Xxxxxxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx
(the "Company") and XXXX XXXXXXX (the "Employee").
RECITALS:
The Company and the Employee have reached an
understanding with respect to the employment of the Employee
by the Company. The parties desire to set forth their
understanding with respect to such employment fully and
completely in writing.
NOW, THEREFORE, the parties agree as follows:
1. Employment. The Company shall employ the Employee,
and the Employee shall work for the Company upon the terms and
conditions set forth herein.
2. Exclusive Agreement. During the term of this
Agreement, the Employee shall devote his full time and best
effort to the business of the Company.
3. Employment Term. Unless earlier terminated in
accordance with the terms of this Agreement, the Employee s
term of employment by the Company (the "Employment Term")
shall be for a period of three (3) years commencing August 1,
1995.
4. Confidential Information. The Employee acknowledges
that any use of the Company s Confidential Information
(defined below) by the Employee other than for the sole
benefit of the Company would be wrongful and cause irreparable
harm to the Company. Accordingly, the Employee shall not, at
any time during or subsequent to his employment by the
Company, without the express written consent of the Company,
publish, disclose or divulge to any person, firm or
corporation, or use, directly or indirectly, for his own
benefit or for the benefit of any person, firm or corporation,
for use other than for the Company, any property, trade
secrets, or Confidential Information (defined below) of the
Company or its affiliates. "Confidential Information"
includes, but is not limited to all data, reports,
interpretations, forecasts, records, statements (written and
oral) and documents of any kind relating to the Company s
costs and financial information, manufacturing methods or
processes, market studies, products, existing and potential
customers, pricing methods and strategies, new product plans
and sources of supply. In addition, all other information
disclosed to the Employee or which the Employee shall obtain
during such employment with the Company which the Employee has
a reasonable basis to believe to be confidential, or which the
Employee has a reasonable basis to believe the Company treats
as confidential, shall be presumed to be Confidential
Information.
5. Salary and Expenses. The Company shall pay the
Employee a salary of One Hundred Sixty-Five Thousand Dollars
($165,000.00) per year payable in accordance with the normal
payroll practices of the Company. The Company shall also
reimburse the Employee for all reasonable, legitimate and
documented business expenses incurred by him, on behalf of the
Company, upon submission of accounts in satisfactory form,
subject to such limitations as the Company may impose in its
discretion from time to time.
6. Additional Benefits. In addition to the
compensation described in Section 5, the Employee shall be
entitled during the Employment Term to receive the following
additional benefits:
(a) Health Insurance. The Company will provide the
Employee with health insurance coverage consistent with the
coverage provided to other employees of the Company from time
to time.
(b) Retirement Plans. The Employee will be
eligible to participate in the Company s 401(k) retirement
plan and such other retirement plans as may be established by
the Company from time to time.
(c) Holidays and Vacations. The Employee shall be
entitled to such paid holidays as may be designated by the
Company. In addition, the Employee shall be entitled to three
(3) weeks of paid vacation for each year during which time his
compensation shall be paid in full. Notwithstanding any other
provisions of this Agreement, in the event Employee is
terminated from the Company for any reason, Employee will be
entitled to a payment reflecting Employee's unused accrued
vacation through such date of termination.
(d) Sick Leave. The Employee shall be entitled to
sick leave in accordance with Company practices.
(e) Stock Options. Subject to the approval of the
Company's Compensation Committee, the Company agrees to grant
to the Employee options to purchase 50,000 shares of common
stock which will be exercisable one year from the date of
grant and will be governed by the terms of the Company's 1985
Stock Option Plan.
(f) Bonus. The Employee has the following bonus
plan in effect for the three year term of this employment
agreement:
Employee is eligible to receive a year end bonus based
upon the pre-tax earnings of the Company for each fiscal year,
if any.
This bonus will be paid in cash and stock options issued
pursuant to the Company's 1985 Stock Option Plan according to
the formula set forth below. The exercise price for the stock
options will be based upon the "Fair Market Value" of the
Company's Common Stock on the date of grant, as defined in the
Stock Option Plan, and all options shall be fully exercisable
one year from the date of grant. All bonuses earned pursuant
to this Section, whether in cash or stock options, will be
subject to a cap of five million dollars in pre-tax earnings
of the Company and no bonus will be paid on any pre-tax
earnings in excess of five million dollars.
The cash component of the bonus will be equal to 1%, or
fraction thereof, of Employee's annual salary for each
$100,000, or portion thereof, of pre-tax earnings of the
Company for each fiscal year. The cash component of the bonus
will be capped at 50% of Employee's annual salary per fiscal
year. The Company's pre-tax earnings will be rounded to the
nearest thousand dollars for the purpose of this calculation.
By way of example, if the Company has $1,625,000 in pre-
tax earnings in a given fiscal year, Employee will be entitled
to a cash bonus equal to 16.25% of Employee's annual salary.
The stock option component of the bonus will be equal to
an option to purchase ten shares of the Company's Common Stock
for each $1,000 in pre-tax earnings of the Company, subject to
a cap of 50,000 shares per fiscal year. The Company's pre-tax
earnings will be rounded to the nearest thousand dollars for
purposes of this calculation.
By way of example, if the Company has $2,325,000 in pre-
tax earnings in any given fiscal year, Employee will be
entitled to stock options to purchase 23,250 shares of the
Company's Common Stock.
Bonus payments payable pursuant to this Section shall be
made in a lump sum payment within two weeks of the
finalization of the Company's year end audit. Stock Options
to be granted pursuant to this Section will also be granted
within such two week period.
Notwithstanding the foregoing, Employee must be employed
with the Company on December 31 of any given year in order to
be eligible to receive the above bonus for that year. In the
event Employee is not so employed, the following provisions
shall apply:
(1) If Employee is terminated for cause by the Company,
or if Employee voluntarily terminates Employee's
employment with the Company prior to December 31 of
any given year (except as described under the
circumstances in Section 7(d)), Employee shall
receive no bonus for that year or any subsequent
year;
(2) If Employee is terminated by the Company without
cause, prior to December 31 of any given year or if
Employee exercises Employee's rights under Section
7(d), whether or not Employee is in breach of this
Agreement or if this Agreement is terminated prior
to December 31 upon the death or disability of
Employee as provided in Section 7(a), Employee
shall receive only a prorata portion of any bonus
earned pursuant to this Section 6 which prorata
portion shall be based upon the percentage of 365
calendar year days for which Employee is employed
during said calendar year. Any bonus due pursuant
to this subsection (2) shall be paid as provided in
this Section 6.
Any direct or indirect payments made by the Company to or
on behalf of the Employee determined by the Company s
accountants to be reportable for tax purposes shall be treated
as compensation to the Employee.
7. Termination of Employment.
(a) The Employee s employment pursuant to this Agreement
shall terminate upon the death of the Employee or upon his
inability, by reason of a mental or physical condition, to
perform his duties hereunder for an uninterrupted period of
sixty (60) days ("Disability"), and may be terminated for
"cause" (as defined below) by the Company at any time during
the Term immediately upon written notice of termination given
by the Company to the Employee describing such cause. For
purposes of this Agreement, "cause" for termination shall be
deemed to exist if: (i) the Employee is convicted of a felony
which involves an intentional act of the Employee; (ii) the
Employee engages in dishonesty or fraud; (iii) the Employee
breaches any of his material obligations under this Agreement;
(iv) the Employee has been materially negligent or grossly
inefficient in the performance of his duties under this
Agreement; or (v) the Employee refuses or fails to take
reasonable and material actions directed by the President.
Any written notice of termination for cause pursuant to
this Section shall be a written notice which (a) indicates the
specific termination provision relied upon, (b) sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment, and
(c) if the date of termination is other than the date of
receipt of such notice, specifies the termination date. In
the event that Employee's employment is terminated pursuant to
subsections (iii), (iv) or (v) above, Employee shall have a
period of thirty (30) days to cure the breach of Employee's
obligations under this Agreement as described in the Notice of
Termination. In the event that Employee cures such breach
within said thirty (30) day period, the notice of termination
shall be considered rescinded. In the event that Employee
fails to cure such breach, then this Agreement will terminate
without further notice to Employee as set forth in the notice
of termination, and the provisions of 7(b) shall be
applicable. Employee shall not have the opportunity to cure
any termination for cause pursuant to subsections (i) and (ii)
above.
(b) In the event (i) the Employee s employment
under this Agreement is terminated for cause as provided
above, or (ii) the Employee voluntary terminates his
employment with the Company, other than pursuant to Section
7(d), prior to the end of the Employment Term, the Company
shall promptly pay to the Employee (or to the Employee s legal
representatives) the amount of any compensation attributable
to periods prior to such termination, plus the amount of any
reimbursable expenses. No other payments shall be due
Employee.
(c) In the event the Employees employment is
terminated without cause, whether or not Employee is in breach
of this Agreement, or the Employee loses his employment for
any other reason, other than pursuant to Section 7(b),
including but not limited to bankruptcy, closure,
reorganization, buyout, merger, consolidation or for any other
reason, the Employee is automatically entitled to severance
payments equal only to one year's salary as provided in
Section 5 above and continuation of existing health care
benefits for one year. No other payments shall be due
Employee except any bonus payments which may be due pursuant
to Section 6(f). Said severance payments shall be paid in the
same manner and on the same schedule (i.e. monthly, weekly,
etc.) as Employee was being paid on the date of termination.
To the extent possible under the Company's Stock Option Plan,
all stock options shall automatically vest and become
immediately exercisable under this provision. Severance
payments being made pursuant to this Section shall survive the
death of Employee.
(d) Notwithstanding the provisions of Section 7(b),
in the event of a merger, consolidation, buyout,
reorganization or any other similar occurrence, Employee shall
have the option of terminating Employee's employment with the
Company and receiving the salary and benefits as provided in
Section 7(c) above. In the event Employee exercises this
option prior to December 31 of any given year, the provisions
of 6(f)(2) shall apply. Such option shall be exercised by
written notice from Employee to the Company which Notice must
be given within thirty (30) days of the definitive closing
date of any such occurrence.
8. Duty of the Employee upon Termination. The Employee
shall, upon termination of this Agreement, return to the
Company all of the Company s records of any type and all
literature, supplies, letters, written or printed forms,
and/or memorandum pertaining to the Company s business.
9. Covenants on Termination.
(a) During the Employment Term and for a period of
one (1) year thereafter, the Employee shall not, directly or
indirectly, on Employee's own behalf or on behalf of any other
person, corporation, partnership or any other entity, whether
as an employee, officer, director, proprietor, partner,
investor, consultant, advisor, agent or in any other capacity,
induce or attempt to induce any customer of the Company to
reduce its business with the Company, or solicit or attempt to
solicit any employees of the Company to leave the employ of
the Company, nor shall Employee affiliate with any party
engaging in the above actions.
(b) The Employee acknowledges that the restrictions
contained in this Section are reasonable and necessary to
protect the business and interests of the Company and that any
violation of these restrictions will cause substantial and
irreparable injury to the Company. Therefore, notwithstanding
the provisions of Section 13 below, the Employee agrees that
the Company is entitled, in addition to any other remedies, to
preliminary and permanent injunctive relief to secure specific
performance, and to prevent a breach or contemplated breach of
this Agreement.
10. Severability. In the event any clause or provision
of this Agreement shall be held to be invalid or
unenforceable, the same shall not affect the validity or
enforceability of any other provision herein, and this
Agreement shall remain in full force and effect in all other
respects. If a claim of invalidity or unenforceability of any
provision of this Agreement is predicated upon the length of
the terms of any covenant or the area covered thereby, such
provision shall not be deemed to be invalid or unenforceable;
rather, such provision shall be deemed to be modified to the
maximum area or the maximum duration as any court of competent
jurisdiction shall deem reasonable, valid and enforceable.
11. Entire Agreement. The parties understand and agree
that this Employment Agreement is the entire Agreement between
the parties regarding the terms and conditions of the
Employee s employment and there are no other agreements. The
terms of this Agreement may not be varied, modified,
supplemented or in any other way changed by extraneous verbal
or written representations by the Company or its agents to the
Employee, unless by amendment to this Agreement executed in
writing by both parties.
12. Governing Law. The Agreement shall be governed by,
construed and enforced in accordance with the laws of the
state of Tennessee.
13. Arbitration. Each party agrees not to bring suit
against the other party in the courts of any jurisdiction in
connection with any dispute which might be the subject of a
civil action arising from the interpretation or application of
this Agreement. Each party agrees that any such dispute shall
be finally resolved by submission to compulsory commercial
arbitration to be held in Chattanooga, Tennessee according to
the American Arbitration Association rules, by one or several
arbitrators appointed. The parties agree to be bound by the
decision of the arbitration and that a judgment of any court
of competent jurisdiction may be rendered upon the award made
pursuant to said submission to arbitration.
14. Survival. The Covenants of Paragraphs 4, 9, 10, 11
and 13 shall survive the termination of this Agreement.
15. Notice. All notices, demands, requests, consents,
reports, approvals, or other communications which may be or
are required to be given, served, or sent pursuant to this
Agreement shall be in writing and shall be mailed by first
class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram or hand delivery,
addressed as first set forth above, or such other address as
a party may subsequently specify in writing.
IN WITNESS WHEREOF, the parties have executed this
Agreement this 30th day of November, 1995_.
SIGNAL APPAREL COMPANY, INC.
Dated: 11/30/95 By: /s/Xxxxx Xxxxx
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Its: President & COO
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Dated: 11/30/95 /s/Xxxx Xxxxxxx
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XXXX XXXXXXX
