EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
XXXXXX FASHIONS CORPORATION
AND
XXXXXXX X. XXXXXX
THIS AGREEMENT is made and entered into this 1st day of March, 1998, by
and between Xxxxxx Fashions Corporation, a corporation duly organized and
existing under the laws of the State of Delaware (the "Corporation") and
Xxxxxxx X. Xxxxxx ("Executive").
ARTICLE 1
EMPLOYMENT
1.1 The Corporation hereby employs Executive, and Executive agrees to
work for the Corporation as President and Chief Executive Officer, and to
perform such related duties as are assigned to him from time to time by the
Board of Directors of the Corporation.
ARTICLE 2
TERM
2.1 The term of this Agreement shall be for a period three (3) years
commencing the date of this Agreement, unless sooner terminated as
hereinafter provided. The Agreement shall thereafter continue in effect from
year to year unless either party provides ninety (90) days written notice of
termination.
ARTICLE 3
DUTIES
3.1 Executive agrees, unless otherwise specifically authorized by the
Board of Directors of the Corporation, to devote his full time and effort to
the best of his abilities to his duties for the profit, benefit and advantage
of the business of the Corporation. Executive shall report directly to the
Board of Directors.
ARTICLE 4
COMPENSATION AND BENEFITS
4.1 The Corporation agrees to pay Executive an annual base salary of
Three Hundred Thousand Dollars ($300,000) payable at those intervals as the
Corporation shall pay other executives. The base salary shall be reviewed
annually and appropriate increases, if any, shall be awarded to
Executive by the Board of Directors in its sole discretion, but such base
compensation shall not be reduced from that of the prior year.
4.2 Subject to the terms and conditions of such plans and programs, the
Executive shall be entitled to participate in the various employee benefit
plans and programs applicable to senior executives of the Corporation,
including but not limited to medical, life and other benefits as well as
vacations, which shall be at such times as reasonably determined by the Board
of Directors of the Company.
4.3 The Executive shall be eligible to receive a bonus in accordance
with the Corporation's bonus plans as in effect and approved by the Board of
Directors from time to time.
4.4 The Corporation shall pay to the Executive a car allowance of
$1,000.00 per month.
ARTICLE 5
INSURANCE
5.1 The Corporation, at its own expense, shall provide life insurance
coverage on the Executive's life. The death benefit shall be in the amount
of $1,000,000, which will consist of one-half split life insurance and
one-half term insurance. The death benefit shall be payable to the
Executive's designated beneficiary. The Executive shall have full discretion
to name the beneficiary of the portion of the insurance provided for benefit
of the Executive. The Corporation shall have the right at its own expense
and for its own benefit to purchase additional insurance on the Executive's
life, and the Executive shall cooperate by providing necessary information,
submitting to required medical examinations, and otherwise complying with the
insurance carrier's requirements.
5.2 The Executive shall be entitled to disability insurance in line
with the present policy of the Corporation, to be provided at the expense of
the Corporation.
ARTICLE 6
DEFINITIONS
6.1 "Cause" shall mean (i) any fraud, misappropriation or embezzlement
by Executive in connection with the business of the Corporation, (ii) any
conviction of a felony or a gross misdemeanor by Executive that has or can
reasonably be expected to have a detrimental effect on the Corporation, (iii)
any gross neglect or persistent neglect by Executive to perform the duties
assigned to him hereunder or any other act that can be reasonably expected to
cause substantial economic or reputational injury to the Company or (iv) any
material breach of Sections 7 or 8 of this Agreement, provided that the
existence of such neglect or material breach shall be determined by the
written agreement of the majority of the directors. If Executive is a member
of the Board of Directors, he shall not vote on any such determination of
"Cause," nor shall he be counted for purposes of
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determining a majority of the directors. Provided further that in connection
with an event described in Section 6.1(iii) above, Executive shall first have
received a written notice from the Corporation which sets forth in reasonable
detail the manner in which Executive has grossly or persistently neglected
his duties and Executive shall have a period of ten (10) days to cure the
same, but the Corporation shall not be required to give written notice of,
nor shall Executive have a period to cure, the same or any similar gross or
persistent neglect or material breach which the Corporation has previously
given written notice to Executive hereunder and Executive has cured such
neglect or breach.
6.2 A "Change of Control" shall be deemed to have occurred if (i) there
shall be consummated (A) any consolidation or merger in which the Corporation
is not the continuing or surviving corporation or pursuant to which shares of
the Corporation's common stock would be converted into cash, securities or
other property, other than a consolidation or a merger having the same
proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions other than in the ordinary course of business of the
Corporation) of all, or substantially all, of the assets of the Corporation
to any corporation, person or other entity which is not a direct or indirect
wholly-owned subsidiary of the Corporation, or (ii) any person, group,
corporation or other entity (collectively, "Persons") shall acquire
beneficial ownership (as determined pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, and rules and regulations
promulgated hereunder) of 50% or more of the Corporation's outstanding common
stock.
6.3 "Confidential Information" means any information that is not
generally known, including trade secrets, outside the Corporation and that is
proprietary to the Corporation, relating to any phase of the Corporation's
existing or reasonably foreseeable business which is disclosed to Executive
during Executive's employment by the Corporation including information
conceived, discovered or developed by Executive. Confidential Information
includes, but is not limited to, business plans; financial statements and
projections; operating forms (including contracts) and procedures; payroll
and personnel records; marketing materials and plans; proposals; supplier
information; customer information; software codes and computer programs;
customer lists; project lists; project files; training manuals; policies and
procedures manuals; health and safety manuals; target lists for new stores
and information relating to potential new store locations; price information
and cost information; administrative techniques or documents or information
that is designated by the Corporation as "Confidential" or similarly
designated.
6.4 A "Competitor" means any person or organization which is a women's
specialty apparel retailer whose operations compete with more than twenty
percent (20%) of the Corporation's store locations as existing on the date of
termination of Executive. Companies which are deemed Competitors shall
include Xxxx Xxxxxx Stores, Inc., Kohls Department Stores and Maurices, a
division of Amcena, and any other women's specialty apparel retailer similar
to such companies and whose operations meet the threshold in the preceding
sentence.
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ARTICLE 7
NONCOMPETITION AND NONSOLICITATION
7.1 During Executive's employment, Executive will not plan, organize or
engage in any business competitive with any product or service marketed or
planned for marketing by the Corporation or conspire with others to do so.
7.2 For a period of one year after termination of Executive's
employment with the Corporation, Executive will not, without the written
permission of the Corporation, (i) directly or indirectly engage in
activities with a Competitor or (ii) own (whether as a shareholder, partner
or otherwise, other than as a 5% or less shareholder of a publicly held
company), or (iii) be connected as an officer, director, advisor, consultant
or employee of or participate in the management of any Competitor.
7.3 For a period of two years after termination of Executive's
employment with the Corporation, Executive will not solicit, entice, or
induce (or attempt to do so, directly or indirectly), any employee of the
Corporation to be employed by any other party.
ARTICLE 8
CONFIDENTIAL INFORMATION AND TRADE DOCUMENTS
8.1 Unless authorized in writing by the Corporation, Executive will not
directly or indirectly divulge, either during or after the term of his
employment, or until such information becomes generally known, to any person
not authorized by the Corporation to receive or use it any Confidential
Information for any purpose whatsoever.
8.2 All documents or other tangible property relating in any way to the
business of the Corporation which are conceived by Executive or come into his
possession during his employment shall be and remain the exclusive property
of the Corporation and Executive agrees to return all such documents and
tangible property to the Corporation upon termination of his employment, or
at such earlier time as the Corporation may request of Executive.
ARTICLE 9
JUDICIAL CONSTRUCTION
9.1 Executive believes and acknowledges that the provisions contained
in this Agreement, including the covenants contained in Articles 7 and 8 of
this Agreement, are fair and reasonable. Nonetheless, it is agreed that if a
court finds any of these provisions to be invalid in whole or in part under
the laws of any state, such finding shall not invalidate the covenants, nor
the Agreement in its entirety, but rather the covenants shall be construed
and/or bluelined, reformed or rewritten by the court as if the most
restrictive covenants permissible under applicable law were contained herein.
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ARTICLE 10
RIGHT TO INJUNCTIVE RELIEF
10.1 Executive acknowledges that a breach by the Executive of any of the
terms of Articles 7 and 8 of this Agreement will render irreparable harm to
the Corporation. Accordingly, the Corporation shall therefore be entitled to
any and all equitable relief, including, but not limited to, injunctive
relief, and to any other remedy that may be available under any applicable
law or agreement between the parties, and to recover from the Executive all
costs of litigation including, but not limited to, attorneys' fees and court
costs.
ARTICLE 11
CHANGE OF CONTROL
11.1 If a Change of Control shall occur during the term of this
Agreement, all unvested rights to purchase stock under outstanding stock
options held by Executive shall vest immediately for the benefit of the
Executive and the Board of Directors will use its reasonable efforts to
register such shares under the Securities Act of 1933, as amended, if
necessary.
11.2 If a Change of Control shall occur, the Executive shall be entitled
to receive from the Corporation or its successor the full base salary of
Executive under this Agreement for one (1) year in one cash installment.
This payment shall be made by the Corporation within ten (10) business days
of consummating the terms and conditions of the transaction which give rise
to the Change of Control.
ARTICLE 12
TERMINATION (OTHER THAN FROM A CHANGE IN CONTROL)
12.1 The Corporation may terminate the employment at any time without
cause by written notice of termination of employment to Executive, or by not
renewing this Agreement for a one-year term. In the event that the Company
terminates the employment of the Executive by delivering notice in accordance
with the preceding sentence, the Executive shall receive as severance his
salary and benefits pursuant to Section 4 (except bonus) from the date of
termination until the earlier to occur of (i) twelve (12) months and (ii) the
securing by the Executive of other employment paying an annual salary and
providing benefits at levels comparable to those set forth in Section 4 of
this Agreement, including without limitation, the engagement of the Executive
by any person(s) or individual or group of entities as a substantially
full-time consultant; PROVIDED, HOWEVER, that in the event that Executive
shall secure other employment or a substantially full time consulting
position paying salary and providing benefits significantly less than those
provided for in Section 4 of this Agreement, the Company shall during such
twelve (12) month period referred to above pay Executive the difference
between his salary payable under this Agreement, and the salary paid by his
new employer (the
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"Salary Continuation"). Notwithstanding the foregoing, upon termination,
Executive shall no longer be eligible under any of the Company's bonus plans.
12.2 The Corporation may terminate the Executive's employment at any
time for Cause and at such time all compensation and benefits provided to
Executive under this Agreement shall immediately cease, subject to applicable
employment laws and regulations.
12.3 This Agreement will terminate upon Executive's death or upon
Executive's disability that prevents him from performing his duties under
this Agreement for a continuous period of three months or for periods
aggregating six months in any eighteen (18) month period.
ARTICLE 13
ASSIGNMENT
13.1 The Corporation shall not have the right to assign this Agreement
to its successors or assigns without the written consent of the Executive;
provided, however, the Corporation shall have the right to assign this
Agreement to any subsidiary, and all covenants or agreements hereunder shall
inure to the benefit of and be enforceable by or against its successors or
assigns.
13.2 The terms "successors" and "assigns" shall include any corporation
which buys all or substantially all of the Corporation's assets, or a
controlling portion of its stock, or with which it merges or consolidates.
ARTICLE 14
FAILURE TO DEMAND PERFORMANCE AND WAIVER
14.1 The Corporation's failure to demand strict performance and
compliance with any part of this Agreement during the Executive's employment
shall not be deemed to be a waiver of the Corporation's rights under this
Agreement or by this operation of law. Any waiver by either party of a
breach of can any provision of this Agreement shall not operate as or be
construed as a waiver of any subsequent breach thereof.
ARTICLE 15
ENTIRE AGREEMENT
15.1 The Corporation and Executive acknowledge that this Agreement
contains the full and complete agreement between and among the parties, that
there are no oral or implied agreements or other modifications not
specifically set forth herein, and that this Agreement supersedes any prior
agreements or understandings, if any, between the Corporation and Executive,
whether written or
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oral. The parties further agree that no modifications of this Agreement may
be made except by means of a written agreement or memorandum signed by the
parties.
ARTICLE 16
GOVERNING LAW
16.1 The parties acknowledge that the Corporation's principal place of
business is located in the State of Minnesota. The parties hereby agree that
this Agreement shall be construed in accordance with the internal laws of the
State of Minnesota without regard to the conflict of laws thereof.
* * * * * * * * * *
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IN WITNESS WHEREOF, the Corporation has hereunto signed its name and the
Executive hereunder has signed his name, all as of the day and year first above
written.
XXXXXX FASHIONS CORPORATION
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxxx X. Xxxx
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Witness Its: Chairman of the Board
--------------------------------
EXECUTIVE
/s/ Xxxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxx
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Witness Xxxxxxx X. Xxxxxx
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