AGREEMENT (this "Agreement") made as of July 11, 2005, between G-III
Apparel Group, Ltd., a Delaware corporation, with an office at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxx Xxxxx, an individual
residing at 00 Xxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000 (the "Executive").
Capitalized terms used herein and not otherwise defined shall have the meanings
given them in that certain Stock Purchase Agreement of even date herewith among
the Company, Executive, and the other owners of X. Xxxxx for Xxxxxx Xxxxxxxx,
Ltd. and related companies (the "Purchase Agreement").
W I T N E S S E T H:
WHEREAS, the Company desires that Executive be employed to serve with the
Division that will be created by the Company to operate the Acquired Companies
and the membership interests in Fabio, and Executive desires to be so employed
by the Company, upon the terms and subject to the conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
The Company hereby employs Executive as the President of the Division and
Vice Chairman of the Company, and Executive hereby accepts such employment,
subject to the terms and conditions herein set forth. Executive hereby agrees to
accept such employment, to diligently, faithfully and competently perform such
services consistent with such position as shall from time to time be reasonably
assigned to him by the Company's Board of Directors or its Chief Executive
Officer, and to diligently, faithfully and competently devote his entire
business time, skill and attention to the performance of his duties and
responsibilities to the Company. Executive shall report directly to the
Company's Chief Executive Officer. The Company shall, subject to the procedures
and requirements of the Nominating Committee of its Board of Directors,
recommend Executive for election as a director of the Company.
The term of employment under this Agreement shall begin on the date hereof
and shall continue until January 31, 2009, subject to prior termination in
accordance with the terms hereof (the "Initial Term"). The Initial Term of this
Agreement shall be automatically extended for successive one (1) year periods
(each a "Renewal Period") unless the Company or the Executive gives written
notice to the other at least ninety (90) days prior to the expiration of the
Initial Term, or ninety (90) days prior to the expiration of a Renewal Period,
of such party's election not to extend this Agreement. References herein to the
"Term" shall mean the Initial Term as it may be so extended by one or more
As compensation for the employment services to be rendered by Executive
hereunder, the Company agrees to pay, or cause to be paid, to Executive, and
Executive agrees to accept, payable in accordance with Company normal payroll
policy at the time in effect, a salary at the rate of Five Hundred Thousand
Dollars ($500,000) per year. Executive shall not be entitled to any additional
compensation for any service as a director of the Company, unless and to the
extent that any other employee of the Company who serves as a director is
compensated for such service.
The Company shall pay or reimburse Executive, 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 in accordance
with Company policy. Executive shall comply with such requirements 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 (the "Code"),
and regulations promulgated thereunder.
5. OTHER BENEFITS.
Executive shall be entitled to four (4) weeks paid vacation per year, and
to participate in the benefit plans and arrangements and receive any other
benefits customarily provided by the Company to its senior executive personnel
(including any profit sharing, pension, disability insurance, hospital, major
medical insurance and group life insurance plans in accordance with the terms of
such plans) (the "Benefit Plans"), provided, however, that the employee share of
major medical premiums for Executive shall be paid by the Company from the date
hereof through December 31, 2005. If requested by the Company, Executive agrees
to undergo a physical examination at the Company's expense in connection with
the Company obtaining "key man" life insurance with respect to Executive. The
Company agrees to provide to Executive $2.0 million of term life insurance while
employed by the Company. When traveling on business, Executive shall be entitled
to air travel on the same basis as other senior executives of the Company. To
the fullest extent permitted by Delaware law, the Company shall indemnify the
Executive and hold him harmless from any and all claims, losses, liabilities and
expenses, including reasonable fees and disbursements of counsel selected by the
Company, arising out of the acts and omissions of Executive as an officer or
director of the Company.
6. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive's employment hereunder shall terminate upon the first to
occur of the following:
(i) upon thirty (30) days' prior written notice to Executive upon
the determination by the Board of Directors of the Company that Executive's
employment shall be terminated for any reason which would not constitute
"justifiable cause" (as hereinafter defined);
(ii) upon written notice to Executive upon the determination by
the Board of Directors of the Company that there is justifiable cause for such
(iii) automatically upon the death of Executive;
(iv) in accordance with the terms of subsection (e) hereof upon
the "disability" (as hereinafter defined) of Executive;
(v) upon thirty (30) days' prior written notice by Executive to
the Company of the Executive's voluntary termination of employment; or
(vi) upon thirty (30) days' prior written notice by Executive to
the Company of the Executive's termination of his employment for "good reason"
(as hereinafter defined).
(b) For the purposes of this Agreement:
(i) the term "disability" shall mean the inability of Executive,
due to illness, accident or any other physical or mental incapacity,
substantially to perform the material functions of his duties for a period of
three (3) 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 Company in good faith; provided that the Company
may not terminate Executive's employment for disability unless it has first
given Executive written notice of such termination and, within fifteen (15) days
after receipt of such notice, Executive has not returned to the performance of
(ii) the term "justifiable cause" shall mean: (1) Executive's
repeated failure or refusal to perform his duties pursuant to, or Executive's
material breach of, this Agreement where such conduct or material breach shall
not have ceased or been remedied within ten (10) days following written warning
from the Company; (2) Executive's conviction of, or plea of guilty or no contest
to, a felony, whether or not involving money or property of the Company or any
of its affiliates (collectively, the "G-III Group"); (3) Executive's material
dishonesty in the course of his employment or performance of any act or his
failure to act which constitutes fraud upon the Company or a breach of a
fiduciary trust towards the Company, including without limitation,
misappropriation of funds or a misrepresentation of the Company's or the
Division's operating results or financial condition; (4) any intentional
unauthorized disclosure by Executive to any person, firm or corporation other
than the members of the G-III Group and their respective directors, managers,
officers and employees, of any confidential information or trade secret of the
G-III Group; (5) any action by Executive to secure any personal profit (other
than (A) de minimis amounts or (B) through his ownership of equity in the
Company or payments due to him under the Purchase Agreement) in connection with
the business of the G-III Group (for example, without limitation, using G-III
Group assets to pursue other interests, diverting any business opportunity
belonging to the G-III Group to himself or to a third party, xxxxxxx xxxxxxx or
taking bribes or kickbacks); (6) Executive's engagement in misconduct materially
damaging to the property, business or reputation of the G-III Group; (7)
Executive's illegal use of controlled substances; (8) any act or omission by
Executive involving willful malfeasance or gross negligence in the performance
of Executive's duties to the material detriment of the G-III Group; or (9) the
entry of any order of a court that remains in effect and is not discharged for a
period of at least sixty (60) days, which enjoins or otherwise limits or
restricts the performance by Executive under this Agreement, relating to any
or commitment made by or applicable to Executive in favor of any former employer
or any other person; and
(iii) the term "good reason" shall mean any of the following
events that occur, after expiration of any remedy or cure period, (A) a material
diminution of Executive's duties and responsibilities that result in a material
adverse effect on Executive's status and authority, which continues unremedied
for a period of thirty (30) days after Executive has given written notice to the
Company specifying in detail the material diminution and material adverse
effect, (B) a change in the Executive's office location to a location more than
fifty (50) miles outside of New York City, except for such travel as the Company
may reasonably require, (C) failure to timely pay Executive any component of
compensation provided for in this Agreement and the Company's failure to cure
such failure within a period of ten (10) days after written notice of such
failure has been given by the Executive to the Company; or (D) failure by the
Buyer to pay any amount due to Executive under Section 2.3 of the Purchase
Agreement within 30 days of the due date specified therein, and any failure by
the Buyer to pay any adjusted amount due to Executive under Section 2.4 of the
Purchase Agreement within thirty (30) days of the determination of such adjusted
amount by the Independent Firm.
(c) Upon termination of Executive's employment by the Company for
justifiable cause or voluntarily by Executive, Executive shall not be entitled
to any amounts or benefits hereunder other than such portion of Executive's
annual salary, accrued leave, reimbursement of expenses pursuant to Section 4
hereof and any amounts payable to Executive under the terms of the Benefit
Plans, each as have been accrued through the date of his termination of
(d) If Executive should 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, accrued leave and reimbursement of expenses pursuant to Section 4
as has been accrued through the date of his death. Executive's estate also shall
be entitled to any amounts or benefits payable to Executive under the terms of
the Benefit Plans.
(e) Upon Executive's disability, the Company shall have the right to
terminate Executive's employment. Any termination pursuant to this subsection
(e) shall be effective on the date thirty (30) days after which Executive shall
have received written notice of the Company's election to terminate. In such
event, Executive shall thereupon be entitled to receive such portion of
Executive's annual salary, accrued leave and reimbursement of expenses pursuant
to Section 4 as has been accrued through the date on which Executive's
employment is terminated by reason of his disability. Executive shall also be
entitled to any amounts or benefits payable under the terms of the Benefit
(f) In the event that Executive's employment is terminated during the
Term by the Company without justifiable cause or by the Executive for good
reason, the Company shall continue to pay compensation to Executive under
Section 3 and to provide benefits under Section 5 for the Term. The Company's
obligation to continue to pay such compensation and provide such benefits shall
be conditional upon (1) Executive executing a general release in the form of
Exhibit A attached hereto in favor of the Company waiving claims pertaining to
termination of his employment and other customary employment-related claims and
(2) Executive's compliance with his obligations under Sections 8, 9, 10 and 11
(g) Upon Executive's termination of his employment hereunder, this
Agreement (other than Sections 4, 6(g), 8, 9, 10, 11 and 14, which shall survive
in accordance with their terms) shall terminate. In such event, except as
provided in Section 6(f), Executive shall be entitled to receive such portion of
Executive's annual salary and vacation as has been accrued to date and shall be
entitled to reimbursement of expenses pursuant to Section 4 hereof and to
continue to participate in the Benefit Plans to the extent participation by
former employees is required by law or permitted by such plans, with the expense
of such participation to be as specified in such plans for former employees.
Executive shall also be entitled to any amounts or benefits payable under the
terms of the Benefit Plans. For the avoidance of doubt, if the Executive's
employment is terminated by the Executive for good reason, the first sentence of
this Section 6(g) and the provisions of Section 6(f) shall be applicable
(h) Upon the Company giving notice of termination pursuant to Section
6(a)(i) or (ii) or Executive giving notice of termination pursuant to Section
6(a)(v) or (vi), the Company may require that Executive immediately leave the
Company's premises, but such requirement shall not affect the effective date of
termination of employment.
7. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
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
(a) In view of the unique and valuable services expected to be
rendered by Executive to the Company, Executive's knowledge of the trade secrets
and other proprietary information relating to the business of the Company and
the Division and in consideration of the compensation to be received hereunder,
Executive agrees that until the later of (i) January 31, 2009 and (ii) a period
of one (1) year following the termination of Executive's employment hereunder
(the "Non-Competition Period"), Executive shall not, whether for compensation or
without compensation, directly or indirectly, as an owner, principal, partner,
member, shareholder, independent contractor, consultant, joint venturer,
investor, licensor, lender or in any other capacity whatsoever, alone, or in
association with any other Person, carry on, be engaged or take part in, or
render services (other than services which are generally offered to third
parties) or advice to, own, share in the earnings of, invest in the stocks,
bonds or other securities of, or otherwise become financially interested in, any
Person engaged in the manufacture, distribution, sale, design, production or
promotion of men's outerwear, women's outerwear or women's suits; provided,
however, that if Executive voluntarily terminates his employment, the
Non-Competition Period under this Agreement shall end one (1) year following
such voluntary termination of employment. The record or beneficial ownership by
Executive of up to the lesser of (i) $400,000 or (ii) 1.0% of the shares of any
corporation whose shares are publicly traded on a national securities exchange
or in the over-the-counter market shall not of
itself constitute a breach hereunder. In addition, Executive shall not, directly
or indirectly, during the Non-Competition Period, request or cause any customers
with whom the G-III Group has a business relationship to cancel or terminate any
such business relationship with any member of the G-III Group or solicit,
interfere with, entice from or hire from any member of the G-III Group any
employee (or former employee) of any member of the G-III Group.
(b) If any portion of the restrictions set forth in this Section 8
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 provisions of this Section 8 were
a material inducement to the Company to enter into this Agreement, and that the
Company would not enter into this Agreement but for the agreements and covenants
contained herein. Executive further acknowledges that the limitations set forth
in this Section 8 are reasonable and properly required for the adequate
protection of the business of the G-III Group. Executive hereby waives, to the
extent permitted by law, any and all right to contest the validity of this
Section 8 on the grounds of breadth of its geographic or product or service
coverage or length of term. In the event any such limitation hereunder 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 time period which
such court shall deem reasonable.
(d) Nothing contained in this Agreement shall require the Company to
utilize Executive's services under this Agreement, the Company's only obligation
to Executive being payment of his compensation, benefits and expenses under this
Agreement during the Initial Term.
9. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the Company, with
all necessary detail for a complete understanding of the same, all developments,
know-how, improvements, concepts, ideas, designs, sketches, writings, processes
and methods (whether copyrightable, patentable or otherwise) made, received,
conceived, developed, 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 Employment Term, solely or jointly with others, using the G-III
Group's resources, or relating to any current or proposed business or activities
of the G-III Group known to him as a consequence of his employment or the
rendering of 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 trademarks, copyrights or patents, as may be necessary to
obtain trademarks, copyrights and patents for the Subject Matter in any and all
countries and to vest title thereto in the Company. Executive shall assist the
Company in obtaining such trademarks, copyrights or patents during the term of
this Agreement, and 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
following termination of employment Executive shall be reasonably compensated
for his time and reimbursed his reasonable out-of-pocket expenses incurred in
rendering such assistance or giving or preparing to give such testimony if it is
required after the Non-Competition Period.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or at any
time following expiration or 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) or as is 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 Company, to any person,
firm or corporation, any Confidential Information (as hereinafter defined)
acquired by him during the course of, or as an incident to, his employment
hereunder, relating to the G-III Group, any client of the G-III Group, 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 ("G-III Confidential Information"). As used herein, the term
"Confidential Information" shall mean proprietary technology, trade secrets,
designs, sketches, know-how, market studies and forecasts, competitive analyses,
pricing policies, employee lists, personnel policies, manufacturing sources, the
substance of agreements with customers, suppliers and others, marketing
arrangements, licensing agreements, servicing and training programs and
arrangements, customer lists and any other documents embodying such confidential
information. This confidentiality obligation shall not apply to any G-III
Confidential Information which becomes publicly available other than in
violation of this Section 10.
(b) All information and documents relating to the G-III Group as
hereinabove described shall be the exclusive property of the G-III Group, and
Executive shall use his 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.
11. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a breach of,
any of the provisions of Sections 8, 9 or 10 (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
injunctive relief and/or to have the Restrictive Covenants specifically enforced
by a court of competent jurisdiction, without the posting of any bond or other
security, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the G-III Group 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.
12. 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.
13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
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.
The Company may deduct and withhold from the payments to be made to
Executive hereunder any amounts required to be deducted and withheld by the
Company under the provisions of any applicable statute, law, regulation or
ordinance now or hereafter enacted.
Any notices required or permitted to be given hereunder shall be sufficient
if in writing, and if delivered by hand or overnight 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.
17. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Agreement may be signed in counterparts with the same effect as if the
signatures to each counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this Agreement. For
purposes of this Agreement, a facsimile copy of a party's signature shall be
sufficient to bind such party.
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 and contemporaneous agreements,
both written and oral, between the parties with respect to the subject matter
hereof, other than provisions of the Purchase Agreement, and may be modified
only by a written instrument signed by each of the
parties hereto. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives, heirs,
distributors, successors and assigns; provided, however, that Executive shall
not be entitled to assign or delegate any of his rights or obligations hereunder
without the prior written consent of the Company. It is intended that Sections
8, 9, 10 and 11 benefit each of the Company and each other member of the G-III
Group, each of which is entitled to enforce the provisions of Sections 8, 9, 10
The termination of Executive's employment hereunder or the expiration of
this Agreement shall not affect the enforceability of Sections 8, 9, 10 and 11
21. 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.
22. CONSTRUCTION OF AGREEMENT.
No provision of this Agreement or any related document shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party having or being
deemed to have structured or drafted such provision.
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, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
G-III APPAREL GROUP, LTD.
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
/s/ XXXXX XXXXX
[Letterhead of G-III Apparel Group, Ltd.]
This will confirm that your employment with G-III Apparel Group, Ltd.. (the
"Company") has been terminated as of [date]. In exchange for your general
release and fulfillment of all of your commitments in this Agreement, which are
set forth below, the Company will pay you the amounts (the "Severance Payments")
set forth in Section 6(f) of your employment agreement with the Company (the
"Employment Agreement"). In addition, you agree (i) to comply with the terms of
Sections 8, 9 and 10 of the Employment Agreement, (ii) not to disparage the
Company or any of its subsidiaries (collectively, the "G-III Group") or make or
cause to be made any statement that is critical of or otherwise maligns the
business reputation of the G-III Group and (iii) not to tortiously interfere in
any manner with the present or future business activities of the G-III Group.
The Company agrees not to disparage you or make or cause to be made any
statement that is critical of or otherwise maligns your business reputation and
not to tortiously interfere in any manner with your future business activities.
The foregoing voluntary payment is given in return for your discharge and
release of all claims, obligations, and demands which you have, ever had, or in
the future may have, against the Company, any affiliated entities and any of its
or their stockholders, officers, directors, employees, or agents, arising out of
or relating to your employment and the termination thereof up to the date of
this Release, including, but not limited to, claims under Title VII of the Civil
Rights Act of 1964, the Fair Labor Standards Act, applicable New York State law,
the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the
Older Workers Benefits Protection Act, the Employee Retirement Income Security
Act of 1974, the Americans With Disabilities Act, and all other federal, state,
and local discrimination laws, and claims for wrongful discharge. You further
waive and release any claimed right to reemployment, or employment in the future
with the Company or any other member of the G-III Group. You do not, however,
waive or release any claims which arise after the date that you execute this
agreement or any claims to enforce your rights to the Severance Payments under
the Employment Agreement.
The Company has advised you to consult with an attorney and/or governmental
agencies prior to executing this agreement. By executing this agreement you
acknowledge that you have been provided an opportunity to consult with an
attorney or other advisor of your choice regarding the terms of this agreement,
that you have been given a minimum of twenty-one days in which to consider
whether you wish to enter into this agreement, and that you have elected to
enter into this
agreement knowingly and voluntarily. You may revoke your assent to this
agreement within seven days of its execution by you (the "Revocation Period"),
and the agreement will not become effective or enforceable until the Revocation
Period has expired.
If this is in accordance with our agreement, please sign and return to us
the enclosed copy of this letter, which shall then be a binding agreement
G-III APPAREL GROUP, LTD.
Agreed and Accepted: