EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of the 27th day of
February, 1997, is made by and between GFSI, INC., a Delaware corporation (the
"Company"), and XXXXXX X. XXXXX, an individual ("Executive").
W I T N E S S E T H:
WHEREAS, Executive has been actively involved in the business of Winning
Ways, Inc., a Missouri corporation ("Winning Ways"), as an employee,
stockholder, officer and member of the Board of Directors; and
WHEREAS, the Company and GFSI Holdings, Inc., a Delaware corporation
("Holdings"), collectively, have agreed to purchase all of the issued and
outstanding shares of capital stock of Winning Ways pursuant to an Agreement for
Purchase and Sale of Stock, dated January 24, 1997 (the "Purchase Agreement"),
by and among the Company, Holdings and all the stockholders of Winning Ways;
WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, Winning Ways will be merged with and into the Company, with the
Company as the surviving entity;
WHEREAS, the Company desires to retain the services of Executive and
Executive desires to be retained by the Company;
NOW, THEREFORE, in consideration of the premises, the covenants and the
agreements contained herein, the parties hereto agree as follows:
1. Employment. The Company hereby retains the Executive as the Chairman of
the Company, and the Executive hereby agrees to serve as the Chairman of the
Company, for a term commencing as of the date of this Agreement and ending on
the tenth 10th) anniversary of the date of this Agreement. The Executive shall
be accessible to the Company and shall undertake and perform such services as
are reasonably requested by the Company's Board of Directors, including, without
limitation, assisting in any transition necessitated by the sale of the stock of
Winning Ways and fostering the Company's relationships with its suppliers and
customers. Notwithstanding the foregoing, the Company acknowledges that the
Executive has historically taken, and will continue to take, frequent and
lengthy vacations. According, the Company understands that the Executive will
not undertake a full-time work schedule.
2. Salary. During the term of this Agreement, the Company will pay
Executive an annual salary (the "Salary") as set
forth on Exhibit A attached hereto, payable in substantially equal monthly or
more frequent installments.
3. Benefits. During the term of this Agreement, the Executive will receive
the benefits set forth on Exhibit B attached hereto. Such benefits will be
essentially the same as Executive received while employed by Winning Ways,
including (x) a secretary, (y) an assistant and (z) the use of three automobiles
of a type similar to the makes and models provided by Winning Ways to the
Executive prior to the date hereof; provided, however, the Executive shall not
receive any (i) stock options or (ii) bonuses.
4. Expenses. The Company shall reimburse the Executive for such ordinary,
necessary and reasonable business expenses as are advanced by him in the
performance of his services hereunder; but such expenses shall be substantiated
by the Executive in writing to the reasonable satisfaction of the Company.
Notwithstanding the preceding sentence, the Company shall not reimburse the
Executive for any commuting expenses to or from the Company or any of its
facilities.
5. Termination.
(a) The Company may terminate this Agreement, all of the Company's
obligations under this Agreement, and Executive's employment hereunder for
"cause," upon the delivery of written notice to Executive, following the
occurrence of any one of the following events on the part of Executive:
1. Conviction of any felony;
2. Executive's violation of any non-competition agreement with the Company
or with any Affiliate (as defined in the Purchase Agreement) of the Company.
3. Total or partial disability of Executive that has continued for at least
12 months;
4. Frequent drunkenness on the job; or
5. The death of Executive.
(b) In the event that this Agreement is terminated by the Company for
"cause" or voluntarily terminated by Executive, the Company shall pay any
amounts earned by Executive under Section 2 hereof up to the date of
termination.
(c) If the Company terminates this Agreement for "cause," but the Executive
contests such termination, the Company shall continue to make all payments
required by Section 2 of this Agreement after the date of such termination until
and unless a final judgment is rendered in favor of the Company and against the
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Executive. For purposes of this section, a final judgment means a judgment from
which there is no possibility of further appeal.
6. Inventions, Etc. The Executive agrees that all inventions conceived of
or developed by the Executive during the term of his employment with the
Company, whether alone or jointly with others and whether during working hours
or otherwise, which relate to the business or interests of the Company, or any
business or other company in which the Company or Holdings now or hereafter has
an ownership interest, shall be the Company's exclusive property. The Executive
shall (i) promptly disclose in writing to the Company each invention, conceived
or developed by the Executive during the term of his employment with the
Company, (ii) assign all rights to such inventions to the Company and (iii)
assist the Company in every way to obtain and protect any patents, trademarks or
copyrights on such inventions.
7. Notices. Any notice, request, consent or communication (collectively a
"Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service for next day delivery, with delivery confirmed, or
(iv) telecopied, with receipt confirmed, addressed as follows:
a. If to Executive:
Xxxxxx X. Xxxxx
0000 Xxxxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
with a copy to:
Xxxxxxx Xxxx, Esq.
Rose, Xxxxxxxxxxx & Xxxxxxx, P.C.
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx Xxxx, XX 00000
Telecopier: 000-000-0000
b. If to the Company to:
GFSI, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Telecopier: 000-000-0000
with copies to:
GFSI Holdings, Inc.
0 Xxxx 00xx Xxxxxx, Xxxxx 0000
3
New York, New York 10019
Attention: A. Xxxxxxx Xxxxxx, Xx.
Telecopier: 000-000-0000
G. Xxxxxx Xxxxxx, Esq.
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
or such other persons or addresses as shall be furnished in writing by either
party to the other party. A Notice shall be deemed to have been given as of the
date when (i) personally delivered, (ii) three days after the date when
deposited with the United States mail properly addressed, (iii) when receipt of
a Notice sent by an overnight delivery service is confirmed by such overnight
delivery service, or (iv) when receipt of the telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
8. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by Executive.
9. Attorneys' Fees. If any legal action or other proceeding is commenced to
enforce or interpret any provision of, or otherwise relating to, this Agreement,
the losing party shall pay the prevailing party's reasonable expenses incurred
in the investigation of any claim leading to the proceeding, preparation for and
participation in the proceeding, any appeal or other post judgment motion, and
any action to enforce or collect the judgment, including contempt, garnishment,
levy, discovery and bankruptcy. "Expenses" shall include, without limitation,
court or other proceeding costs and experts' and attorneys' fees and their
expenses. The phrase "prevailing party" shall mean the party who is determined
in the proceeding to have prevailed and who prevails by dismissal, default or
otherwise.
10. Governing Law. This Agreement shall be governed by the law of the State
of Missouri as to all matters, including, but not limited to, matters of
validity, construction, effect and performance, except that no doctrine of
choice of law shall be used to apply any law other than of Missouri.
11. Severability. The Company and Executive believe the covenants contained
in this Agreement are reasonable and fair in all respects, and are necessary to
protect the interests of the Company and Executive. However, in case any one or
more of the
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provisions or parts of a provision contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement or any other
jurisdiction, but this Agreement shall be reformed and construed in any such
jurisdiction as if such invalid, illegal or unenforceable provision or part of a
provision had never been contained herein and such provision or part shall be
reformed so that it would be valid, legal and enforceable to the maximum extent
permitted in such jurisdiction.
12. Neutral Interpretation. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against either
party based upon the source of the draftsmanship hereof.
13. Miscellaneous. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and may not be modified orally, but only
by a writing subscribed by the party charged therewith. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings (whether oral or written)
between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
COMPANY:
GFSI, INC.
By /s/ Xxxx X. Xxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxx, President
EXECUTIVE:
/s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx
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EXHIBIT A
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SALARY
------
YEAR SALARY
---- ------
March 1, 1997 - February 28, 1998 $140,000
March 1, 1998 - February 28, 1999 $155,000
March 1, 1999 - February 29, 2000 $170,000
March 1, 2000 - February 28, 2001 $190,000
March 1, 2001 - February 28, 2002 $205,000
March 1, 2002 - February 28, 2003 $225,000
March 1, 2003 - February 29, 2004 $245,000
March 1, 2004 - February 28, 2005 $265,000
March 1, 2005 - February 28, 2006 $285,000
March 1, 2006 - February 28, 2007 $305,000
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EXHIBIT B
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BENEFITS
--------
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