EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of August 14, 2000,
between DESIGNS, INC., a Delaware corporation with an office at 00 X Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx, 00000 (the "Company"), and Xxxxxx Xxxxxxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company desires that Executive be employed to serve in a
senior executive capacity with the Company, and Executive desires to be so
employed by the Company, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby
accepts such employment, subject to the terms and conditions herein set forth.
Executive shall hold the office of Senior Vice President and Chief Financial
Officer of the Company.
2. TERM
The term of employment under this Agreement shall begin on
September 4, 2000 (the "Employment Date") and shall continue for a period of one
(1) year from that date, subject to prior termination in accordance with the
terms hereof. Upon the expiration of the Executive's initial one (1) year term
of employment, the Company has the option to extend the term of this Agreement
for an additional one (1) year, under the terms and conditions set forth herein.
3. COMPENSATION
(a) As compensation for the employment services to be rendered
by Executive hereunder, the Company agrees to pay to Executive, and Executive
agrees to accept, payable in equal installments in accordance with Company
practice, an annual base salary of $225,000.
(b) If the Company does not exercise its option to extend the
term of this Agreement for additional one (1) year as provided in Section 2
above, the Company will pay Executive one half of his annual base salary, in
equal biweekly payments over a six month period commencing on the expiration of
the initial term of employment. This Subsection shall not apply if Executive is
terminated pursuant to Section 8 of this Agreement.
(c) In addition to the annual base salary, Executive may
receive a discretionary annual bonus of up to forty-five percent (45%) of his
annual base salary (the "Discretionary Bonus"), depending on the performance
of the Company. The Compensation Committee of the Board of Directors shall
determine, in its sole discretion, the amount of any bonus to be paid to
Executive. Executive will receive a prepayment of the Discretionary Bonus in
the amount $1,250 per month. Any Discretionary Bonus that the Compensation
Committee determines shall be paid to Executive shall be reduced by the
amount of any prepayments made to Executive.
(d) The Company will pay Executive the total amount of $30,000
for moving costs associated with Executive's relocation to the Boston,
Massachusetts metropolitan area. ("Boston"). However, if the Executive
resigns his position with the Company during the term of this Agreement,
Executive shall reimburse to the Company the $30,000 payment within thirty
(30) days after the effective date of his resignation.
(e) The Executive must permanently relocate to Boston on or
before April 4, 2001. The Company will reimburse the Executive's reasonable
air fare related to his travel (round trip coach air fare with fourteen day
advance purchase only) between Boston and Pittsburgh, Pa. (which shall be
limited to two (2) trips per month) and provide Executive with temporary
living quarters in Boston. The Company's obligation to reimburse Executive
for the reasonable air fare and provide temporary living quarters as set
forth in this Subsection shall cease upon the earlier of (a) the date the
Executive permanently relocates to Boston or (b) April 4, 2001. If Executive
resigns his position with the Company during the term of this Agreement,
Executive shall reimburse to the Company the costs of any and all air fare
and expenses for temporary living quarters paid by the Company within thirty
(30) days after the effective date of his resignation.
4. OPTIONS
The Company shall grant to the Executive 60,000 options under
the Company's 1992 Stock Incentive Plan, which are exercisable at a purchase
price per share equal to the closing price of the Common Stock on September 4,
2000. The options will vest pro rata over a three (3) years period commencing on
the Employment Date, with one third of the total vesting and becoming
exercisable on each of the first, second and third anniversaries of the
Employment Date. In addition, the Executive must execute a standard Stock Option
Agreement, which sets the terms and conditions for the Executive's options. The
stock options must be exercised by September 4, 2010 or they shall become null
and void.
5. EXPENSES
The Company shall pay or reimburse Executive, in accordance
with the Company's policies and procedures and upon presentment of suitable
vouchers, for all reasonable business and travel expenses, which may be incurred
or paid by Executive in connection with his employment hereunder. Executive
shall comply with such restrictions and shall keep such records as the Company
may deem necessary to meet the requirements of the Internal Revenue Code of
1986, as amended from time to time, and regulations promulgated thereunder.
6. OTHER BENEFITS
(a) Executive shall be entitled to such vacations and to
participate in and receive any other benefits customarily provided by the
Company to its senior management (including any profit sharing, pension, 401(k),
short and long-term disability insurance, major medical insurance and group life
insurance plans in accordance with the terms of such plans), all as determined
from time to time by the Compensation Committee of the Board of Directors.
(b) The Company will, during the term of Executive's
employment hereunder, provide Executive with an automobile for his use in
performing his employment duties and obligations hereunder. If the Company
provides an automobile, the Company shall pay for the costs of insurance,
repairs and maintenance. If the Company does not provide Executive with an
automobile, the Company will pay an automobile allowance to Executive in the
total amount of $600.00 per month. In that event, Executive shall pay and be
responsible for all insurance, repairs and maintenance costs associated with
operating that automobile. In either case, Executive is responsible for his
gasoline, unless the gasoline expense is reimbursable under the Company's
policies and procedures.
7. DUTIES
(a) Executive shall perform such duties and functions as the
Board of Directors of the Company shall from time to time determine and
Executive shall comply in the performance of his duties with the policies of,
and be subject to the direction of, the Board of Directors. If requested,
Executive shall serve as a corporate officer and or director of the Company
without further compensation.
(b) At the request of the Board of Directors, Executive shall
serve, without further compensation, as an executive officer, corporate officer
and/or director of any subsidiary or affiliate of the Company and, in the
performance of such duties, Executive shall comply with the directives and
policies of the Board of Directors of each such subsidiary or affiliate.
(c) During the term of this Agreement, Executive shall devote
substantially all of his time and attention, vacation time and absences for
sickness excepted, to the business of the Company, as necessary to fulfill his
duties. Executive shall perform the duties assigned to him with fidelity and to
the best of his ability. Notwithstanding anything herein to the contrary, and
subject to the foregoing, Executive may engage in other activities so long as
such activities do not unreasonably interfere with Executive's performance of
his duties hereunder and do not violate Section 10 hereof.
(d) The principal location at which the Executive shall perform
his duties hereunder shall be at the Company's offices in Needham, Massachusetts
or at such other location as may be designated from time to time by the Board of
Directors of the Company. Notwithstanding the foregoing, Executive shall perform
such services at such other locations as may be required for the proper
performance of his duties hereunder, and Executive recognizes that such duties
may involve travel.
8. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION
(a) Executive's employment hereunder may be terminated at
any time:
(i) upon the determination by the Board of
Directors that Executive's performance of his duties has not been fully
satisfactory for any reason which would not constitute justifiable cause (as
hereinafter defined) upon thirty (30) days' prior written notice to Executive;or
(ii) upon the determination by the Board
of Directors that there is justifiable cause (as hereinafter defined) for such
termination upon ten (10) days' prior written notice to Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter
defined in Subsection (c) herein) pursuant to Subsection (g) hereof.
(c) For the purposes of this Agreement, the term "disability"
shall mean the inability of Executive, due to illness, accident or any other
physical or mental incapacity, substantially to perform his duties for a period
of two (2) consecutive months or for a total of four (4) months (whether or not
consecutive) in any twelve (12) month period during the term of this Agreement,
as reasonably determined by the Board of Directors of the Company after
examination of Executive by an independent physician reasonably acceptable to
Executive.
(d) For the purposes hereof, the term "justifiable cause"
shall mean: any repeated willful failure or refusal to perform any of the duties
pursuant to this Agreement where such conduct shall not have ceased within 5
days following written warning from the Company; Executive's conviction (which,
through lapse of time or otherwise, is not subject to appeal) of any crime or
offense involving money or other property of the Company or its subsidiaries or
affiliates or which constitutes a felony in the jurisdiction involved;
Executive's performance of any act or his failure to act, as to which if
Executive were prosecuted and convicted, a crime or offense involving money or
property of the Company or its subsidiaries or affiliates, or a crime or offense
constituting a felony in the jurisdiction involved, would have occurred; any
unauthorized disclosure by Executive to any person, firm or corporation other
than the Company, its subsidiaries or affiliates and their respective directors,
officers and employees (or other persons fulfilling similar functions), of any
confidential information or trade secret of the Company or any of its
subsidiaries or affiliates; any attempt by Executive to secure any personal
profit in connection with the business of the Company or any of its subsidiaries
and affiliates; or the engaging by Executive in any business other than the
business of the Company and its subsidiaries and affiliates which unreasonably
interferes with the performance of his duties hereunder. Upon termination of
Executive's employment for justifiable cause, this Agreement shall terminate
immediately and Executive shall not be entitled to any amounts or benefits
hereunder other than such portion of Executive's annual salary and reimbursement
of expenses pursuant to Section 5 hereof as have been accrued through the date
of his termination of employment.
(b) If the Company terminates this Agreement without
"justifiable cause" as provided in Subsection 8 (a)(i) above, the Company shall
pay Executive the greater of: (i) the base salary for the remaining term of this
Agreement or (ii) an amount equal to one half of Executive's annual base salary.
However, if Executive is employed or retained, as an employee, independent
contractor, consultant or in any other capacity ("New Employment") during the
time he receives payment under this Subsection or Subsection 3 (b), the Company
is entitled to a credit for all sums paid or earned by Executive during this
period of time. The Executive must make a good faith effort to find New
Employment and mitigate the amount of money to be paid by the Company to
Executive under this Subsection or Subsection 3(b). The Company will pay any
amount due and owing under 8 (a)(i) and 8(a)(ii) above in accordance with the
payment schedule in 3(a), until paid in full.
(f) If Executive shall die during the term of his employment
hereunder, this Agreement shall terminate immediately. In such event, the estate
of Executive shall thereupon be entitled to receive such portion of Executive's
annual salary and reimbursement of expenses pursuant to Section 5 as have been
accrued through the date of his death.
(g) Upon Executive's "disability", the Company shall have the
right to terminate Executive's employment. Notwithstanding any inability to
perform his duties, Executive shall be entitled to receive his base salary and
reimbursement of expenses pursuant to Section 5 as provided herein until he
begins to receive long-term disability insurance benefits under the policy
provided by the Company pursuant to Section 6 hereof. Any termination pursuant
to this Subsection (g) shall be effective on the later of (i) the date 30 days
after which Executive shall have received written notice of the Company's
election to terminate or (ii) the date he begins to receive long-term disability
insurance benefits under the policy provided by the Company pursuant to Section
6 hereof.
(h) Upon the resignation of Executive in any capacity, that
resignation will be deemed to be a resignation from all offices and positions
that Executive holds with respect to the Company and any of its subsidiaries and
affiliates.
9. REPRESENTATION AND AGREEMENTS OF EXECUTIVE
(a) Executive represents and warrants that he is free to enter
into this Agreement and to perform the duties required hereunder, and that there
are no employment contracts or understandings, restrictive covenants or other
restrictions, whether written or oral, preventing the performance of his duties
hereunder.
(b) Executive agrees to submit to a medical examination and to
cooperate and supply such other information and documents as may be required by
any insurance company in connection with the Company's obtaining life insurance
on the life of Executive, and any other type of insurance or fringe benefit as
the Company shall determine from time to time to obtain.
(c) Executive represents and warrants that he has never been
convicted of a felony and he has not been convicted or incarcerated for a
misdemeanor within the past five years, other than a first conviction for
drunkenness, simple assault, speeding, minor traffic violations, affray, or
disturbance of the peace.
(d) Executive represents and warrants that he has never been a
party to any judicial or administrative proceeding that resulted in a judgement,
decree, or final order (i) enjoining him from future violations of, or
prohibiting any violations of any federal or state securities law, or (ii)
finding any violations of any federal or state securities law.
(e) Executive represents and warrants that he has never been
accused of any impropriety in connection with any employment;
(f) Executive represents and warrants that he is
currently licensed as a Certified Public Accountant and that no state
department of accountancy has every suspended, revoke or terminated his license.
Any breach of any of the above representations and warranties is "justifiable
cause" for termination under Section 8 of this Agreement.
10. NON-COMPETITION
(a) Executive agrees that during his employment by the Company
and during the one year period following the termination of Executive's
employment hereunder (the "Non-Competitive Period"), Executive shall not,
directly or indirectly, as owner, partner, joint venturer, stockholder,
employee, broker, agent, principal, trustee, corporate officer, director,
licensor, or in any capacity whatsoever, engage in, become financially
interested in, be employed by, render any consultation or business advice with
respect to, or have any connection with, any business which is competitive with
products or services of the Company or any of its subsidiaries and affiliates,
in any geographic area in the United States of America and Puerto Rico where, at
the time of the termination of his employment hereunder, the business of the
Company or any of its subsidiaries and affiliates was being conducted or was
proposed to be conducted in any manner whatsoever; provided, however, that
Executive may own any securities of any corporation which is engaged in such
business and is publicly owned and traded but in an amount not to exceed at any
one time one percent (1%) of any class of stock or securities of such
corporation. In addition, Executive shall not, during the Non-Competitive
Period, directly or indirectly, request or cause any suppliers or customers with
whom the Company or any of its subsidiaries and affiliates has a business
relationship to cancel or terminate any such business relationship with the
Company or any of its subsidiaries and affiliates or solicit, hire, interfere
with or entice from the Company any employee (or former employee) of the
Company.
(b) If any portion of the restrictions set forth in this
Section 10 should, for any reason whatsoever, be declared invalid by a court of
competent jurisdiction, the validity or enforceability of the remainder of such
restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the Company conducts business
throughout the Eastern portion of United States (all states east of the
Mississippi River and Missouri) and Puerto Rico, that its sales and marketing
prospects are for continued expansion throughout the United States and
therefore, the territorial and time limitations set forth in this Section 10 are
reasonable and properly required for the adequate protection of the business of
the Company and its subsidiaries and affiliates. In the event any such
territorial or time limitation is deemed to be unreasonable by a court of
competent jurisdiction, Executive agrees to the reduction of the territorial or
time limitation to the area or period which such court shall deem reasonable.
(d) The existence of any claim or cause of action by Executive
against the Company or any subsidiary or affiliate shall not constitute a
defense to the enforcement by the Company or any subsidiary or affiliate of the
foregoing restrictive covenants, but such claim or cause of action shall be
litigated separately.
11. INVENTIONS AND DISCOVERIES
(a) Upon execution of this Agreement and thereafter, Executive
shall promptly and fully disclose to the Company, and with all necessary detail
for a complete understanding of the same, all existing and future developments,
know-how, discoveries, inventions, improvements, concepts, ideas, writings,
formulae, processes and Methods (whether copyrightable, patentable or otherwise)
made, received, conceived, acquired or written during working hours, or
otherwise, by Executive (whether or not at the request or upon the suggestion of
the Company) during the period of his employment with, or rendering of advisory
or consulting services to, the Company or any of its subsidiaries and
affiliates, solely or jointly with others, in or relating to any activities of
the Company or its subsidiaries and affiliates known to him as a consequence of
his employment or the rendering of advisory and consulting services hereunder
(collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to
assign and transfer, to the Company, all his rights, title and interest in and
to the Subject Matter, and Executive further agrees to deliver to the Company
any and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such further papers,
including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and at any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter; provided, however, that Executive shall be compensated in a timely
manner at the rate of $250 per day (or portion thereof), plus out-of-pocket
expenses incurred in rendering such assistance or giving or preparing to give
such testimony if it is required after the termination of this Agreement.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
(a) Executive shall not, during the term of this Agreement or
at any time following termination of this Agreement, directly or indirectly,
disclose or permit to be known (other than as is required in the regular course
of his duties (including without limitation disclosures to the Company's
advisors and consultants), as required by law (in which case Executive shall
give the Company prior written notice of such required disclosure) or with the
prior written consent of the Board of Directors of the Company), to any person,
firm, corporation, or other entity, any confidential information acquired by him
during the course of, or as an incident to, his employment or the rendering of
his advisory or consulting services hereunder, relating to the Company or any of
its subsidiaries and affiliates, the directors of the Company or its
subsidiaries and affiliates, any supplier or customer of the Company or any of
their subsidiaries and affiliates, or any corporation, partnership or other
entity owned or controlled, directly or indirectly, by any of the foregoing, or
in which any of the foregoing has a beneficial interest, including, but not
limited to, the business affairs of each of the foregoing. Such confidential
information shall include, but shall not be limited to, proprietary technology,
trade secrets, patented processes, research and development data, know-how,
market studies and forecasts, financial data, competitive analyses, pricing
policies, employee lists, personnel policies, the substance of agreements with
customers, suppliers and others, marketing or dealership arrangements, servicing
and training programs and arrangements, supplier lists, customer lists and any
other documents embodying such confidential information. This confidentiality
obligation shall not apply to any confidential information which becomes
publicly available other than pursuant to a breach of this Section 12(a) by
Executive.
(b) All information and documents relating to the Company and
its affiliates as hereinabove described (or other business affairs) shall be the
exclusive property of the Company, and Executive shall use commercially
reasonable best efforts to prevent any publication or disclosure thereof. Upon
termination of Executive's employment with the Company, all documents, records,
reports, writings and other similar documents containing confidential
information, including copies thereof then in Executive's possession or control
shall be returned and left with the Company.
13. SPECIFIC PERFORMANCE
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11 or 12 (the "Restrictive
Covenants"), the Company shall have, in addition to, and not in lieu of, any
other rights and remedies available to the Company under law and in equity, the
right to have the Restrictive Covenants specifically enforced by a court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION
No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties hereto.
15. GOVERNING LAW
This Agreement shall be governed by, and construed and
enforced in accordance with the substantive laws of The Commonwealth of
Massachusetts, without regard to its principles of conflicts of laws.
16. SEVERABILITY
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect.
17. NOTICES
Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand or courier, or sent by
certified mail, return receipt requested, to the addresses set forth above or
such other address as either party may from time to time designate in writing to
the other, and shall be deemed given as of the date of the delivery or at the
expiration of three days in the event of a mailing.
18. WAIVER OR BREACH
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed as a waiver of
any subsequent breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT
This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof, supersedes all prior agreements, both
written and oral, between the parties with respect to the subject matter hereof,
and shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, heirs, distributors, successors and
assigns.
20. SURVIVAL.
Except as otherwise expressly provided herein, the termination
of Executive's employment hereunder or the expiration of this Agreement shall
not affect the enforceability of Sections 5, 8, 10, 11, 12 and 13 hereof.
21. ARBITRATION
If any dispute arises between the parties that they
cannot settle, the parties agree to submit the dispute to arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and both parties agree to be bound by the arbitration award.
22. FURTHER ASSURANCES
The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
23. HEADINGS
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, amend or affect its provisions.
24. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
under seal, as of the date and year first above written.
DESIGNS, INC.
By: /s/ XXXXX X. XXXXX
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Its: CEO/PRESIDENT
/s/ XXXXXX X. XXXXXXXXX
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Xxxxxx Xxxxxxxxx
