Exhibit 10.91
XXXXXXX CHAUS, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
June 1, 2001
Xx. Xxxxxxx Xxxxxx
c/o Bernard Chaus, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxx:
We are pleased to offer you continued employment with Xxxxxxx
Chaus, Inc. (the "Company") effective June 1, 2001 (the "Effective Date"), on
the terms set forth below. This letter agreement supersedes the letter
agreement, dated January 7, 2000, between you and the Company.
POSITION: President (reporting to the Chief Executive Officer
and Chief Operating Officer). You shall devote all of
your business time and attention to the business and
affairs of the Company consistent with your position
with the Company.
SALARY: Your base salary shall be as follows:
(i) from the Effective Date through May 31, 2002: $500,000 per year;
(ii) from June 1, 2002 through May 31, 2003: $550,000 per year;
(iii) from June 1, 2003 through May 31, 2004: $600,000 per year.
TERM: Effective Date through May 31, 2004.
Bonus: You shall be eligible to participate in the
Company's incentive compensation plan. We anticipate
that targets for each fiscal year during the term
will be set on or prior to July 1 of each fiscal
year. Your bonus will be based upon targets set by
the Compensation Committee in its sole discretion.
Your minimum bonus for the fiscal year ending June
30, 2002 will be $150,000 and you will be paid that
minimum amount on September 1, 2001, unless you leave
the Company voluntarily or are terminated for cause
(as defined herein) prior to such date. The targets
will be based upon "Annual Net Profits" which shall
mean the net income of the Company for any fiscal
year as reflected on the audited financial statements
of the Company for such fiscal year prepared in
accordance with generally accepted accounting
principles. The bonus for a particular
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June 1, 2001
Page 2
fiscal year shall be payable to you on September 1
following such fiscal year ended June 30, but only if
you are employed by the Company on June 30 of such
fiscal year; provided, however, that if your
employment shall be terminated by the Company without
Cause (as defined below) other than as a result of
your death or disability, prior to the end of a
fiscal year, the pro rated portion of the bonus for
such year (based upon the number of months of the
fiscal year which elapsed before the termination
date) shall be paid to you on September 1 following
such fiscal year.
AUTOMOBILE
ALLOWANCE: $700 per month.
COMPANY
EXPENSE: You will be provided with a computer laptop and a
cellular telephone at the Company's expense, so long
as you are employed with the Company, in order for
you to perform the services hereunder.
BENEFITS: Participant in the Company's 401(k) plan.
Health insurance, including family coverage (with a
deductible not to exceed $1,000 per plan year). Term
life insurance equal to two (2) times base salary,
subject to your being in good health and not rated an
insurance risk based upon any past medical history at
the time the insurance is obtained.
Long-term disability coverage equal to 60% of salary,
up to a maximum of $15,000 a month. Coverage under
other policies available to officers of the Company
generally.
VACATION: Four weeks paid vacation, not to be taken more than
two weeks at a time and not to be carried over from
year to year.
OPTIONS: On August 4, 2001 (the "Option Date"), the Company
shall grant to you options to purchase 500,000 shares
of the Company's Common Stock (the "2001 Options"),
pursuant to the terms hereof, provided, that you are
employed with the Company on the Option Date. The
exercise price of the 2001 Options shall be the last
sale price of the Company's Common Stock as of
closing on the Option Date (Previous Close), as
quoted on the Over the Counter Bulletin Board. The
2001 Options shall vest in three equal annual
installments (rounded up to the nearest whole share)
on the anniversary dates of the Option Date and shall
otherwise be subject to the terms of the Company's
1998 Stock Option Plan (the "Plan"). The 2001 Options
and any other options granted to you under the Plan
are
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June 1, 2001
Page 3
collectively referred to herein as the Options. In
the event your employment is terminated by the
Company without Cause (as defined below ) following a
Change of Control (as defined below), other than due
to your death or disability, any Options, which would
have vested at the anniversary of the grant date of
the applicable Option next following the date of
termination, shall vest immediately, any other
unvested Options shall be forfeited and you shall
have thirty (30) days from the termination date to
exercise vested Options. In the event of termination
for any other reason, all unvested Options shall be
forfeited and you shall have thirty (30) days from
the termination date to exercise vested Options. The
2001 Options shall be granted to you in addition to
any Options which you may become entitled to receive
on August 4, 2001 in exchange for options surrendered
by you in February 2001.
TERMINATION
BENEFITS: In the event your employment is terminated by the
Company without Cause, other than due to your death
or disability and other than following a Change of
Control, you shall be paid, in full satisfaction of
your rights against the Company for termination of
your employment, non-competition payments equal to
twelve (12) months' base salary, payable in twelve
(12) monthly installments. The foregoing payments
shall terminate immediately upon your acceptance of a
position as employee (including self- employment) or
consultant with another entity, and you agree to
provide immediate notice to the Company of your
acceptance of any such position. In the event your
employment is terminated by the Company without
Cause, other than due to your death or disability and
other than following a Change of Control, you hereby
agree to use commercially reasonable efforts to
obtain another position as employee or consultant. In
the event your employment is terminated by the
Company without cause, other than due to your death
or disability and other than following a Change of
Control, you shall also be paid a bonus payment which
shall be equal to the pro rated portion of the bonus
for the year of termination as calculated in
accordance with, and on the time frame provided
under, the "bonus" section above. In the event your
employment is terminated due to cause, your death or
a disability which prevents you from performing your
duties for three consecutive months or one hundred
eighty (180) days within any two year period, you
shall be paid only through the date of termination.
In the event your employment is terminated by the
Company without Cause (other than due to your death
or disability) following a Change of
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June 1, 2001
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Control, you shall be paid, in full satisfaction of
your rights against the Company for termination of
your employment, within ten (10) days following your
termination date, (a) a lump sum payment, less
applicable withholdings and deductions, in an amount
equal to your salary for the remaining term of this
letter agreement calculated in accordance with the
terms of the "Salary" section above; and (b) a bonus
payment which shall be equal to the pro rated portion
of the bonus for the year of termination as
calculated in accordance with, and on the time frame
provided under, the "Bonus" section above; and (c)
your Options which have not yet vested, shall be
vested immediately and you shall have ninety (90)
days from the termination date to exercise all of
your Options.
In the event your employment is terminated by the
Company without Cause following a Change of Control
(other than due to your death or disability) and you
elect to continue your medical insurance coverage
under COBRA, the Company shall make COBRA premium
payments on your behalf for a period equal to the
lesser of (x) the remaining term of this letter
agreement and (y) twelve (12) months following such
termination.
CAUSE: Conviction of or plea of guilty or nolo contendere to
a felony; gross negligence or willful misconduct in
performing your duties resulting in material harm to
the Company or material diminution in the value of
the Common Stock; failure to comply with this letter
agreement in any material respect or failure to carry
out appropriate responsibilities assigned by the
Company's Chief Executive Officer, Chief Operating
Officer or the Board of Directors after, in either
case, notice of such failure and a thirty (30) day
cure period; commission of fraud, theft against or
embezzlement from the Company.
CHANGE OF CONTROL: The Company shall be merged or consolidated with an
unaffiliated entity resulting in a change in a
majority of the Board of Directors or the Company
shall have sold substantially all of its assets to an
unaffiliated entity; the acquisition by any person or
group of beneficial ownership (as such terms are
defined under Regulation 13D of the rules and
regulations adopted under the Securities Exchange Act
of 1934, as amended) of more than 50% of the
Company's then outstanding common stock resulting in
a change in a majority of the Board of Directors.
NON-COMPETITION: You agree not to compete with the business of the
Company (i.e., women's apparel) directly or
indirectly, whether as principal, manager, agent,
employee, consultant, investor, advisor or
representative, during the term
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June 1, 2001
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of your employment with the Company and for a period
of twelve months thereafter. The foregoing will not
prohibit (i) your employment with a men's apparel
division of a company that is also engaged in the
business of women's apparel so long as you do not
provide any advice to, or perform any duties for, the
women's apparel division of such company or (ii) a
passive investment by you in a public company not
exceeding 2% of any class of equity securities of
such company. In the event that your employment
hereunder is terminated without Cause following a
Change of Control, your obligations under this
Non-Competition paragraph shall automatically
terminate.
NON-SOLICITATION
PERIOD: You agree that, during the term of your employment
with the Company and for a period of twelve months
thereafter, you will not solicit or hire any persons
who were employed or acting as a consultant to the
Company during the twelve-month period prior to the
termination of your employment with the Company.
CONFIDENTIALITY: You agree that you will, during and after the end of
the term of your employment with the Company, keep
confidential all non-public information concerning
the Company or its business, except in the business
of and for the benefit of the Company, and you will
not, directly or indirectly, use for your own account
any of such information.
REMEDIES: As you can understand, since we have to be protected,
the Company will be entitled, in addition to other
remedies, to obtain an injunction against any
potential or actual violations of your
non-competition, non-solicitation or confidentiality
agreements.
WITHHOLDING TAXES: All compensation hereunder shall be subject to
applicable withholding taxes.
GOVERNING LAW: New York
REPRESENTATION: You represent that your execution of this letter and
your performance of your obligations hereunder will
not violate the terms of any agreement, arrangement,
or understanding, order or decree to which you are a
party or by which you are bound.
Xx. Xxxxxxx Xxxxx
June 1, 2001
Page 6
Please indicate your acceptance of the terms of this letter
agreement by your signature below. Once signed by both parties, this letter
agreement shall be binding on both parties. We look forward to your continued
employment with the Company.
Sincerely,
Xxxxxxx Chaus, Inc.
By: /s/ Xxxxxxxx XxXxxxx
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Xxxxxxxx XxXxxxx
Chief Operating Officer
Accepted and Agreed to as of the date set forth above:
/s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
