EXHIBIT 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by and between
Supreme International Corporation ("Supreme" or "Company") and Xxxx Xxxxxxx
("Xxxxxxx" or "Employee").
1. Term of Employment:
This Agreement is effective for a three year period commencing on April
23, 1999 and terminating without further notice at 5:00 p.m. on April 30, 2002,
unless terminated earlier in accordance with the provisions set forth in
paragraphs 5, 6, 7, 8 and 9 below.
2. Duties and Responsibilities:
Supreme agrees to employ Xxxxxxx as President of Licensing with such
powers and duties in that capacity as may be established from time to time by
Supreme in its discretion. Xxxxxxx will devote his entire time, attention and
energies to Supreme's business and shall perform the duties of an executive
commensurate with such position, shall diligently perform all services as may be
assigned to him by the Board of Directors (the "Board") and shall exercise such
power and authority as may from time to time be delegated to him by the Board.
Xxxxxxx shall devote all his working time and attention to the business and
affairs of Supreme. During his employment, Xxxxxxx will not engage in any other
business activities, regardless of whether such activity is pursued for profits,
gains, or other pecuniary advantage.
The Company agrees to nominate and use its best efforts to cause
Xxxxxxx to be elected to the Board throughout the term of employment. If Xxxxxxx
is so elected, he agrees to serve on the Board without additional compensation;
provided, however, that Xxxxxxx shall resign immediately from the Board at such
time as he is no longer employed by the Company.
In connection with his employment by the Company, Xxxxxxx shall be
based at the Company's principal, executive offices in Florida except for
required travel on the Company's business to an extent substantially consistent
with his present travel obligations.
3. Compensation:
(A) Base Salary: Supreme will pay a base salary of three hundred
fifty thousand dollars ($350,000.00) per annum to Xxxxxxx,
payable in installments according to the Company's normal
payroll practices subject to applicable withholding and other
taxes. Said salary is effective April 23, 1999.
(B) SALARY INCREASES: Xxxxxxx'x base salary will be adjusted
upward on May 1 of each subsequent year by the twelve month
average of the Consumer Price Index ("CPI") for the preceding
year. The minimum CPI adjustment will be three percent (3%)
per year and the maximum CPI adjustment will be six percent
(6%) per year.
(C) Stock Options: On the commencement date of April 23, 1999, the
Company shall grant to Xxxxxxx non-qualified stock options
under the Company's 1993 Stock Option Plan, as amended (the
"Plan") to purchase an aggregate of 25,000 shares of Common
Stock at an exercise price equal to the fair market value on
the commencement date of employment as set forth in the
schedule below. The options shall vest over a three year
period as described in the schedule set forth below, assuming
that Xxxxxxx remains employed by Supreme on the dates that the
options are to be deemed vested. In the event that Xxxxxxx is
not employed by Supreme on dates that the options are to be
deemed vested, regardless of the reason for his separation
from Supreme, the options that are not vested shall
immediately terminate and expire. There will be no "pro-rated"
vesting of
any options for the period in which Xxxxxxx ceases to be
employed by Supreme.
On April 30, 2000, 50% of the 25,000 options will be
deemed vested (I.E., 12,500 options) and may be exercised at
the price equal to the closing price reported by NASDAQ on the
commencement date of employment. On April 30, 2001, another
6,250 options will be deemed vested and may be exercised at
the price equal to the closing price as reported by NASDAQ on
the commencement day of employment. On April 30, 2002, the
final 6,250 options will be deemed vested and may be exercised
at the price equal to the closing price as reported by NASDAQ
on the commencement day of employment. Xxxxxxx will have five
(5) years to exercise each segment of the vested options as
they mature. The stock options shall otherwise be subject to
and governed by the other terms of the 1993 Stock Option Plan,
as amended.
(D) Performance Bonuses: After the end of Xxxxxxx'x first, second
and third year of employment, Supreme will pay Xxxxxxx a
performance bonus for each respective year to be calculated in
accordance with the following schedule, subject to the limits
set forth below:
(1) If the year-end audited license income of Xxxxx Xxxxx
International, Inc. ("PEI") (excluding advertising
and all other billable expenses of PEI, and excluding
the gross revenues and income of Xxxxxx or any of the
licenses held by Xxxxxx) exceeds $10,000,000.00, then
Xxxxxxx will be entitled to receive an amount equal
to five percent (5%) of only the INCREASE in the
license income above $10,000,000.00 until the license
income reaches $11,000,000.00. The maximum amount
that Xxxxxxx will be paid as a performance bonus at
this license income range is $50,000.00 (I.E., .05 x
$1,000,000.00 increase in license income).
(2) If the year-end audited license income of PEI (excluding
advertising and all other billable expenses of PEI, and
excluding the gross revenues and income of Xxxxxx or any of
the licenses held by Xxxxxx) exceeds $11,000,000.00, then in
addition to the foregoing performance bonus in
subparagraph(d)(i) above, Xxxxxxx will be entitled to receive
an amount equal to four percent (4%) of only the INCREASE in
the license income above $11,000,000.00 until the license
income reaches $12,000,000.00. The maximum amount that Xxxxxxx
will be paid as a performance bonus at this license income
range is $40,000.00 (I.E., .04 x $1,000,000.00 increase in
license income). Any bonus paid at this license range will be
in addition to the amount paid under subparagraph (d)(i).
(3) If the year-end audited license income of PEI (excluding
advertising and all other billable expenses of PEI, and
excluding the gross revenues and income of Xxxxxx or any of
the licenses held by Xxxxxx) exceeds $12,000,000.00, then in
addition to the foregoing performance bonuses in subparagraphs
(d)(i) and (d) (ii) above, Xxxxxxx will be entitled to receive
an amount equal to three percent (3%) of only the INCREASE in
the license income above $12,000,000.00 until the license
income reaches $14,000,000.00. The maximum amount that Xxxxxxx
will be paid as a performance bonus at this license income
range is $60,000.00 (I.E., .03 x $2,000,000.00 increase in
license income). Any bonus paid at this license income range
will be in addition to the amounts paid under subparagraphs
(d)(i) and (d)(ii) above.
(4) If the year-end audited license income of PEI (excluding
advertising and all other billable expenses of PEI, and
excluding the gross revenues and income of Xxxxxx or any of
the licenses held by Xxxxxx) exceeds $14,000,000.00, then in
addition to the foregoing performance bonuses in subparagraph
(d)(i), (d)(ii) and (d)(iii) above, Xxxxxxx will be entitled
to receive an amount equal to two percent (2%) of only the
INCREASE in license income above $14,000,000.00 until the
license income reaches $15,750,000.00, subject to the
following limitation. The maximum amount that Xxxxxxx will
receive as a performance bonus at this license income range is
$35,000.00 (I.E., .02 x $1,750,000.00 increase in license
income), or a lesser amount if the bonus under this subsection
(iv) causes Xxxxxxx'x total bonus compensation under
subparagraphs (d)(i), (d)(ii), (d)(iii) and (d)(iv) to exceed
fifty percent (50%) of his base salary for any given year. Any
bonus paid at this license
income range will be in addition to the amounts paid under
subparagraph (d)(i), (d)(ii), and (d)(iii) above, provided
that the bonus under this subsection (iv) does not cause
Xxxxxxx'x total bonus compensation under subparagraphs (d)(i),
(d)(ii), (d)(iii) and (d)(iv) to exceed fifty percent (50%) of
his base salary for any given year. In the event that the sum
total of the performance bonuses for any given year exceed the
fifty percent (50%) limit of Xxxxxxx'x then base salary,
Xxxxxxx shall only be entitled to a bonus in the amount of
fifty percent (50%) of his then base salary, regardless of the
level of license income of PEI for that year. In any event,
Xxxxxxx will NOT be entitled to any performance --- bonus on
any license income increases of PEI above $15,750,000.00
(excluding advertising and all other billable expenses of PEI,
and excluding the gross revenues and income of Xxxxxx or any
of the licenses held by Xxxxxx).
If Xxxxxxx fails to receive a performance bonus of at
least $70,000.00 dollars for his first year of employment with
Supreme under the foregoing bonus computation methodology set
forth in subparagraphs(d)(i), (d)(ii), and (d)(iii) and
(d)(iv), Supreme will pay Xxxxxxx the difference between
$70,000.00 dollars and the sum amount of the performance bonus
he actually received for the first year, assuming that Xxxxxxx
remains employed with Supreme on April 30, 2000. If Xxxxxxx
fails to receive a performance bonus of $52,500.00 for his
second year of employment with Supreme under the foregoing
bonus computation methodology set forth in subparagraphs
(d)(i), (d)(ii), (d)(iii) and (d)(iv), Supreme will pay
Xxxxxxx the difference between $52,500.00 and the sum amount
of the performance bonus he actually received for his second
year of employment, assuming that Xxxxxxx remains employed
with Supreme on April 30, 2001. Xxxxxxx is NOT guaranteed any
minimum bonus for his third year of employment (I.E., May 1,
2001 to April 30, 2002). In the event that Xxxxxxx is not
employed with Supreme on either of the annual anniversary
dates set forth above because Supreme has terminated the
contract without cause, he will be entitled a pro rata payment
of the performance bonuses through date of
employment. There will be no proration of these performance
bonuses if Xxxxxxx terminates this contract, or if Supreme
terminates this Agreement for cause.
(4) Car Allowance: Supreme will pay to Xxxxxxx a car allowance of
nine hundred dollars ($900.00) per month. Such sums will be
treated as income to Xxxxxxx.
(5) Relocation Costs: Supreme will reimburse Xxxxxxx for all
reasonable moving expenses incurred in relocating to Miami,
Florida, not to exceed $100,000.00. Payment of such expenses
will be made by Supreme by May 10, 2000. Supreme will
reimburse Xxxxxxx only upon submission of appropriate
documentation of payment of such expenses by Xxxxxxx.
During Xxxxxxx'x period of transition from New York
to Miami, Florida, Xxxxxxx shall be reimbursed $200.00 per
night, Sunday through Thursday, in lieu of staying at a hotel
in New York City. This transition period shall not exceed one
year.
(6) Other Benefits: Xxxxxxx will be entitled to participate in any
group health, dental, life or disability plan and is entitled
to any other benefits that the Company may maintain from time
to time for all employees, provided that Xxxxxxx meets the
respective eligibility requirements. In addition, Supreme
agrees to reimburse Xxxxxxx for any health insurance premiums
paid by Xxxxxxx that are related to Xxxxxxx only (excluding
family coverage) until he becomes eligible to participate in
Supreme's health insurance plan. Xxxxxxx shall submit
appropriate documentation to Supreme reflecting his payment of
such premiums. Such sums will be treated as income to Xxxxxxx.
(7) Vacation, Personal and Sick Leave: Xxxxxxx shall be entitled
to take three weeks of paid vacation during each year of
employment. Xxxxxxx will automatically be entitled to his
first three weeks of vacation upon commencing employment with
Supreme. Xxxxxxx shall be entitled to three (3) days of paid
sick leave and three (3) days of paid personal leave. Unused
vacation time, sick leave and/or personal leave may not be
carried over to subsequent years and will not be paid-out if
not taken for any reason.
(1) Expense Reimbursement: During the term of employment, the
Company, upon the submission of supporting documentation by
Xxxxxxx, and in accordance with Company policies for its
executives, shall reimburse Xxxxxxx for all expenses actually
paid or incurred by Xxxxxxx in the course of and pursuant to
the business of the Company, including expenses for travel and
entertainment.
4. Performance Review:
Xxxxxxx shall provide the Company with an interim review and evaluation
of his performance at the beginning of the each calendar year of this Agreement.
It is contemplated that this review will normally occur in January of each year,
but said review may be postponed or delayed in appropriate circumstances.
Xxxxxxx shall be responsible for taking action to initiate the performance
review.
5. Xxxxxxx'x Death or Inability to Perform:
(1) In the event of Xxxxxxx'x death, this Agreement and Supreme's
obligation to pay Xxxxxxx'x salary and compensation shall
automatically end.
(b) If Xxxxxxx becomes unable to perform his
employment duties during the term of this Agreement, his base
salary under this Agreement
shall be continued for the first 90 days of any inability to
perform. Thereafter for the next 90 days he shall receive 50%
of his base salary. All such salary payments for the 180 day
period are to be reduced by any available disability
insurance. In the event that Xxxxxxx is still unable to
perform his employment duties after the 180 day period, the
Company has the right to terminate this Agreement. In the
event that the company elects to terminate this Agreement,
Xxxxxxx'x salary and compensation shall automatically end as
of the date of termination; however, Xxxxxxx shall be entitled
to a pro rated performance bonus as set forth in paragraph
3(d) as well as reimbursement of expenses incurred to date of
termination.
6. TERMINATION BY COMPANY FOR CAUSE:
The Company may terminate this Agreement and Xxxxxxx'x employment "for
cause" at any time with or without notice. As used herein, "for cause" shall
mean material breach of this agreement, theft, embezzlement, material
dereliction of the performance of his duties, insubordination, and conviction of
a crime other than traffic violations or minor misdemeanors and insobriety or
drug use while performing duties (provided that cause shall not include the
failure to achieve performance objectives).
7. Termination of Agreement by the Company without Cause:
The Company may terminate this Agreement and Xxxxxxx'x employment
without cause. In such case, Xxxxxxx shall be entitled to receive his base
salary for a period of one year or the remainder of the term of this Agreement,
whichever is less, to be paid in accordance with paragraph 3(a) and (b) plus the
pro rata performance bonus as set forth in paragraph 3(d) as well as
reimbursement of expenses incurred to date of termination. To obtain these
payments, Xxxxxxx will be required to execute a full waiver and release of all
claims in favor of Supreme and any successor entities.
8. Termination of Agreement By Xxxxxxx
Xxxxxxx may terminate this Agreement and his employment with the
Company without cause upon sixty (60) days prior written notice to the Company.
In such case, Xxxxxxx may be required to perform his business duties and will be
paid his regular salary up to the date of the termination. At the option of the
Company, the Company may require Xxxxxxx to depart from the Company upon
receiving said sixty (60) days' notice from Xxxxxxx of the termination of this
Agreement. If Xxxxxxx is asked to depart prior to the expiration of the sixty
day period, the Company will pay to Xxxxxxx an amount equal to sixty (60)
calendar days of his base salary, excluding any other benefits or compensation
set forth in paragraph 3(b)-3(i) above. If Xxxxxxx terminates this Agreement,
Xxxxxxx will not be entitled to receive any further benefits or other
compensation under this Agreement, and the provisions of paragraph 9 below shall
apply.
9. Effect of Termination:
In the event of Xxxxxxx'x termination under paragraphs 5, 6, 7, or 8
above, and except as may be otherwise provided in paragraphs 3(f), 3(i), 5, 7
and 8, Xxxxxxx'x compensation and benefits to be provided under this Agreement
will immediately cease and terminate upon date of termination. Except as may be
otherwise provided in paragraphs 3(f), 3(i), 5, 7 and 8, Supreme shall not be
liable to Xxxxxxx for any further or additional compensation or benefits from
the date of termination forward. Except as may be otherwise provided in
paragraphs 3(f), 3(i), 5, 7 and 8, compensation that would otherwise be payable
for the remainder of the Agreement (and for prior years and for subsequent
years) shall automatically terminate and forfeit immediately. Except as may be
otherwise provided in paragraphs 3(f), 3(i), 5, 7 and 8, the Company shall have
no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred prior to the date of termination). All options that
are not vested shall immediately terminate and expire. Unless otherwise provided
for in Paragraph 5 and 7, there will be no proration of bonuses and no proration
of vesting of stock options.
10. Notice Regarding Continuation of Employment:
No later than 180 days prior to the expiration of this Agreement, the
Company and Xxxxxxx will each notify the other of their intentions concerning
continuing Xxxxxxx'x employment with Supreme. If Xxxxxxx and the Company agreed
to enter into a new employment contract, the parties will utilize their best
efforts to execute the new contract no later than 120 days prior to the
expiration of this Agreement. If no new agreement is entered into within a 120
days of the expiration of this Agreement, Xxxxxxx shall have the right to seek
employment elsewhere to commence upon expiration of this Agreement and in
accordance with the terms of this Agreement.
11. COOPERATION:
Upon the termination of this Agreement for any reason, Xxxxxxx agrees
to cooperate with the Company in effecting a smooth transition of the management
of the Company with respect to the duties and responsibilities which Xxxxxxx
performed for the Company. Further, after termination of this Agreement, Xxxxxxx
will upon reasonable notice, furnish such information and proper assistance to
the Company as it may reasonably require in connection with any litigation to
which the Company is or may become a party.
12. COVENANT NOT TO COMPETE:
During the term of his employment (whether under this Agreement or
otherwise) and for a period of one year following the voluntary termination by
Xxxxxxx of his employment. Xxxxxxx shall not, directly or indirectly engage in
or have any interest in, directly or indirectly, any sole proprietorship,
partnership, corporation, business or any other person or entity (whether as an
employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that, directly or indirectly, engages primarily in the
development, manufacturing, distribution, or supply of products and services
competitive with the Company's and/or any subsidiary's products and services in
any and all states in which the Company and/or any subsidiary conducts its
business at the time that Xxxxxxx'x employment with the Company is terminated
(the "Territory"); provided that Xxxxxxx can obtain employment with a retailer
that designs, produces and manufactures its product, for example, J. Crew or
Federated Department Store; further it is provided, that Xxxxxxx may hold
Company securities and/or acquire, solely as an investment, shares of capital
stock or other equity securities of any such company, so long as Xxxxxxx does
not control, acquire a controlling interest in, or become a member of a group
which exercises direct or indirect control of, more than five percent of any
class of capital stock of such corporation. This restrictive covenant may be
assigned to any successor entities. This paragraph shall not apply if Xxxxxxx is
not contractually retained by Supreme after expiration of this Agreement.
13. AGREEMENT NOT TO DISCLOSE TRADE SECRETS OR CONFIDENTIAL INFORMATION:
During the term of his employment (whether under this Agreement or
otherwise), and for five (5) years after Xxxxxxx'x termination of employment
(for any reason by Xxxxxxx or Supreme) with Supreme or any successor
organization, Xxxxxxx promises and agrees that he will not disclose or utilize
any trade secrets, confidential information, or other proprietary information
acquired during the course of his service with the Company and/or its related
business entities. As used herein, "trade secret" means the whole or any portion
or phase of any formula, pattern, device, combination of devices, or compilation
of information which is for use, or is used, in the operation of the Company's
business and which provides the Company an advantage, or an opportunity to
obtain an advantage, over those who do not know or use it. "Trade secret" also
includes any scientific, technical, or commercial information, including any
design, list of suppliers, list of customers, or improvement thereof, as well as
pricing information or methodology, contractual arrangements with vendors or
suppliers, business development plans or
activities, or Company financial information. This restrictive covenant may be
assigned to any successor entities.
During the term of his employment (whether under this Agreement or
otherwise), and for five (5) years after Xxxxxxx'x termination of employment
(for any reason by Xxxxxxx or Supreme) with Supreme or any successor
organization, Xxxxxxx shall not divulge, communicate, use to the detriment of
the Company or for the benefit of any other person or persons, or misuse in any
way, any Confidential Information pertaining to the business of the Company. Any
Confidential Information or data now or hereafter acquired by Xxxxxxx with
respect to the business of the Company (which shall include, but not be limited
to, information concerning the Company's financial condition, prospects,
technology, customers, suppliers, methods of doing business and promotion of the
Company's products and services) shall be deemed a valuable, special and unique
asset of the Company that is received by Xxxxxxx in confidence and as a
fiduciary. For purposes of this Agreement "Confidential Information" means
information disclosed to Xxxxxxx as a consequence of or through his employment
by the Company (including information conceived, originated, discovered or
developed by Xxxxxxx) prior to or after the date hereof and not generally known
in the public domain, about the Company or its business.
As previously stated, Xxxxxxx'x obligations under this Section shall
survive the termination of this Agreement. This restrictive covenant may be
assigned to any successor entities.
14. AGREEMENT NOT TO SOLICIT OR HIRE COMPANY EMPLOYEES:
If Xxxxxxx leaves the employ of the Company for whatever reason,
Xxxxxxx promises and agrees that, during the two (2) years following his
departure from the Company, he will not, without the express written permission
of the Company, directly or indirectly employ as a consultant or employee any
person who is employed as a
consultant or employee of the Company at the time of Xxxxxxx'x departure, or any
person who was an employee or consultant of the Company during the six months
preceding Xxxxxxx'x departure. This restrictive covenant may be assigned to any
successor entities.
15. INJUNCTIVE RELIEF:
In recognition of the unique services to be performed by Xxxxxxx and
the possibility that any violation by Xxxxxxx of paragraphs 12, 13 or 14 of this
Agreement may cause irreparable or indeterminate damage or injury to Company,
Xxxxxxx expressly stipulates and agrees that the Company shall be entitled, upon
ten (10) days written notice to Xxxxxxx, to obtain an injunction from any court
of competent jurisdiction restraining any violation or threatened violation of
his Agreement. Such right to an injunction shall be in addition to, and not in
limitation of, any other rights or remedies the Company may have for damages or
liquidated damages.
16. JUDICIAL MODIFICATION OF AGREEMENT:
The Company and Xxxxxxx specifically agree that a court of competent
jurisdiction may modify or amend paragraphs 12, 13 or 14 of this Agreement if
necessary to conform with relevant law or binding judicial decisions in effect
at the time the Company seeks to enforce any or all of said provisions.
17. RESOLUTION OF DISPUTE BY ARBITRATION:
Any claim or controversy that arises out of or relates to this
Agreement or the breach of it, will be resolved by arbitration in the Miami-Dade
County, Florida utilizing the American Arbitration Association. Judgment upon
the award rendered may be entered in any court possessing jurisdiction over
arbitration awards. This Section shall not limit or restrict the Company's right
to obtain injunctive relief for violations of paragraphs 12, 13, or 14 of this
Agreement directly from a court under paragraph 15 of this Agreement.
18. ADEQUATE CONSIDERATION:
Xxxxxxx expressly agrees that the Company has provided adequate,
reasonable consideration for the obligations imposed upon him in this Agreement.
19. EFFECT OF PRIOR AGREEMENTS:
This Agreement supersedes any prior verbal or written agreement or
understanding between the Company and Xxxxxxx.
20. LIMITED EFFECT OF WAIVER BY COMPANY:
If the Company waives a breach of any provision of this Agreement by
Xxxxxxx, that waiver will not operate or be construed as a waiver of later
breaches by Xxxxxxx.
21. SEVERABILITY:
If any provision of this Agreement is held invalid for any reason, the
other provisions of this Agreement will remain in effect, insofar as is
consistent with law.
22. ASSUMPTION OF AGREEMENT BY COMPANY'S SUCCESSORS AND ASSIGNS:
At the Company's sole option, the Company's rights and obligations
under this Agreement will inure to the benefit and be binding upon the Company's
successors and assigns. In the event any successor or assigns desires Xxxxxxx to
relocate out of Miami-Dade, Broward or Palm Beach County, Florida, Xxxxxxx has
the right to terminate this Agreement pursuant to paragraph 8. Xxxxxxx may not
assign his rights and obligations under this Agreement.
23. APPLICABLE LAW:
Xxxxxxx and the Company agree that this Agreement shall be subject to,
and enforceable under, the laws of the State of Florida.
24. ENTIRE AGREEMENT; ORAL MODIFICATIONS NOT BINDING:
This instrument is the entire Agreement of the Company and Xxxxxxx.
Xxxxxxx agrees that no other promises or commitments have been made to Xxxxxxx.
This Agreement may be altered by the parties only by a written Agreement signed
by the party against whom enforcement of any waiver, change, modifications,
extension, or discharge is sought.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on May 23, 1999.
SUPREME INTERNATIONAL CORPORATION XXXX XXXXXXX
By: /s/ XXXXXX XXXXXXXXXXX By: /s/ XXXXX XXXXXXX
Witness:__________________________ Witness:_________________________________
Witness:__________________________ Witness:_________________________________
