Exhibit 10.17
Employment Agreement
Employment Agreement, dated as of February 1, 2004, by and between
Candie's, Inc., a Delaware corporation (the "Company" or "Employer") and Xxxxxxx
Xxxxxx Xxxxx (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently the Company's Senior Vice President and
General Counsel; and
WHEREAS, the Company and Executive entered into an Employment
Agreement dated as of February 1, 2002, (the "Original Agreement"); and
WHEREAS, the term of the Original Agreement expires on January 31, 2004;
and
WHEREAS, the Company wishes, among other things, to continue
the Executive's employment with the Company beyond the term currently provided
by the Original Agreement pursuant to the terms as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Employer and
Executive hereby agree as follows:
1. Term. The Company hereby agrees to employ the Executive for a period
commencing on February 1, 2004 and ending on January 31, 2006 (the "Term").
2. Title; Duties. The Executive shall render services to the Company as chief
counsel to the Company in the position of Senior Vice President - General
Counsel. Executive's duties and responsibilities shall be consistent with the
duties undertaken by the senior legal officer of a corporation. Executive may
elect to work from home one day a week so long as there is no interruption of
her services. Executive shall report directly to Xxxx Xxxx.
3. Compensation.
(a) Base Salary. Executive's base salary for the First Year (as defined below)
will be at a rate of not less than $240,000 per annum paid in accordance with
the Company's payroll practices and policies. Executive's base salary for the
Second Year (as defined below) will be at a rate of not less that $245,000 per
annum paid in accordance with the Company's payroll practices and policies. For
the purposes of this Agreement, the "First Year" shall mean the period February
1, 2004 through January 31, 2005 and the "Second Year" shall mean the period
February 1, 2005 through January 31, 2006.
(b) Bonus. Executive will be eligible for a bonus pursuant to the Company's
executive bonus program, which shall be established during the First Year. If,
for any reason, the Company does not establish such a bonus pool or plan during
the First Year, the Company will meet with Executive prior to the end of the
First Year to discuss a mutually acceptable alternative therefor, including, but
not limited to, a guaranteed bonus for the Second Year.
(c) The Company shall pay to Executive a car allowance of $1,500.
4. Other Benefits and Expenses.
(a) Executive shall be permitted during the Term to participate (without any
waiting periods) in any and all benefit plans, hospitalization, medical, health,
disability, officer/director or employee liability insurance plans, pension and
401K plans or other benefit plans (including any to-be-established bonus plans)
on the same terms and conditions as extended to other executive officers of the
Company.
(b) The Company shall promptly reimburse Executive for all reasonable and
necessary travel and entertainment expenses and other disbursements or costs
Executive may incur in connection with promoting the business of the Company.
(c) Executive shall be entitled to four weeks of paid vacation per year. If, in
any year, Executive does not take some or all of her vacation, such unused days
will be banked and carried over into the next year, as may be applicable.
5. Establishment and Operation of Legal Department.
(a) Executive shall be entitled to a full-time dedicated secretary or assistant.
(b) Executive shall be permitted to attend such professional conferences,
receive such professional publications, acquire such professional books and
materials to build a library, and receive such other facilities and support as
are reasonable and necessary to establish a legal department and perform her
duties hereunder.
(c) Executive shall be provided with all reasonable and necessary facilities and
equipment to carry out her duties, including but not limited to a laptop
computer, cellular phone and home fax machine.
6. Termination.
(a) Executive's employment may be terminated by the Company prior to the
expiration of the Term of this Agreement only for "Cause" by giving Executive
prior written notice of the basis for the proposed termination and a reasonable
chance to cure. As used in this agreement, the term "Cause" shall mean: (a)
Executive's willful and continuing malfeasance and failure to perform having a
material adverse effect on the Company; (b) Executive's willful engagement in
fraud or dishonesty against the Company having a material adverse effect on the
Company; or (c) Executive's conviction of a felony involving moral turpitude.
(b) Executive may terminate this Agreement at any time for "Good Reason" by
giving the Company prior written notice of the basis for the proposed
termination and a reasonable chance to cure. "Good Reason" shall mean any of the
following: (i) a breach by the Company of any of its payment obligations to
Executive hereunder; (ii) relocation of the Company outside a 50-mile radius of
New York City unless the Company shall provide Executive with a suitable
location from which to work within such radius; (iii) a proposed material
modification or reduction of Executive's duties or position as chief counsel;
(iv) the bankruptcy, reorganization or liquidation of the Company; or (v) a
failure of any successor corporation to the Company to assume the obligations
under this Agreement.
7. Effect of Termination.
(a) Upon termination of Executive's employment for Cause (or upon Executive's
death or disability rendering her unable to perform), Executive (or Executive's
heirs and representatives) shall receive any accrued salary, pro-rated bonus and
vacation due through the date of termination and be reimbursed for any
outstanding business expenses (including those relating to Executive's car)
incurred prior to the date of termination. Executive (or Executive's heirs or
representatives, if applicable) shall also be entitled to continuation of health
and medical benefits for 3 months from the date of termination.
(b) If the Company terminates Executive's employment without Cause or Executive
terminates Executive's employment for Good Reason within 12 months after a
Change in Control (as defined in Subsection 7(d)), then the Company shall pay to
Executive in complete satisfaction of its obligations under this Agreement, as
severance pay and as liquidated damages (because actual damages are difficult to
ascertain), in a lump sum, in cash, within 15 days after the date of Executive's
termination, an amount equal to $100 less than three times Executive's
"annualized includable compensation for the base period" (as defined in Section
280G of the Internal Revenue Code of 1986); provided, however, that if such lump
sum severance payment, either alone or together with other payments or benefits,
either cash or non-cash, that Executive has the right to receive from the
Company, including, but not limited to, accelerated vesting or payment of any
deferred compensation, options, stock appreciation rights or any benefits
payable to Executive under any plan for the benefit of employees, which would
constitute an "excess parachute payment" (as defined in Section 280G of the
Internal Revenue Code of 1986), then such lump sum severance payment or other
benefit shall be reduced to the largest amount that will not result in receipt
by Executive of a parachute payment. The determination of the amount of the
payment described in this subsection shall be made by the Company's independent
auditors at the sole expense of the Company. For purposes of clarification the
value of any options described above will be determined by the Company's
independent auditors using a Black-Scholes valuation methodology.
(c) If within 12 months after the occurrence of a Change of Control, the Company
shall terminate Executive's employment without Cause or Executive terminates
Executive's employment for Good Reason, then notwithstanding the vesting and
exercisability schedule in any stock option agreement between the Company and
Executive, all unvested stock options granted by the Company to Executive
pursuant to such agreement shall immediately vest and become exercisable and
shall remain exercisable for not less than 180 days thereafter.
(d) A "Change in Control" shall mean any of the following:
(1) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
common stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company common stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger;
(2) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Company;
(3) any approval by the stockholders of the Company of any plan or proposal for
the liquidation or dissolution of the Company;
(4) the cessation of control (by virtue of their not constituting a majority of
directors) of the Company's Board of Directors by the individuals (the
"Continuing Directors") who (x) at the date of this Agreement were directors or
(y) become directors after the date of this Agreement and whose election or
nomination for election by the Company's stockholders, was approved by a vote of
at least two-thirds of the directors then in office who were directors at the
date of this Agreement or whose election or nomination for election was
previously so approved); or
(5) (A) the acquisition of beneficial ownership ("Beneficial Ownership"), within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of an aggregate of 25% or more of the voting power of the
Company's outstanding voting securities by any person or group (as such term is
used in Rule 13d-5 under the Exchange Act) who beneficially owned less than 10%
of the voting power of the Company's outstanding voting securities on the
effective date of this Agreement, (B) the acquisition of Beneficial Ownership of
an additional 15% of the voting power of the Company's outstanding voting
securities by any person or group who beneficially owned at least 10% of the
voting power of the Company's outstanding voting securities on the effective
date of this agreement, or (C) the execution by the Company and a stockholder of
a contract that by its terms grants such stockholder (in its, hers or his
capacity as a stockholder) or such stockholder's Affiliate (as defined in Rule
405 promulgated under the Securities Act of 1933 (an "Affiliate")) including,
without limitation, such stockholder's nominee to the Company's Board of
Directors (in its, hers or his capacity as an Affiliate of such stockholders),
the right to veto or block decisions or actions of the Company's Board of
Directors' provided however, that notwithstanding the foregoing, the events
described in items (A), (B) or (C) above shall not constitute a Change in
Control hereunder if the acquiror is (aa) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or one of its
affiliated entities and acting in such capacity, (bb) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of voting securities of the Company or (cc)
a person or group meeting the requirements of clauses (ii) and (ii) of Rule
13d-1(b)(1) under the Exchange Act;
(6) subject to applicable law, in a Chapter 11 bankruptcy proceeding, the
appointment of a trustee or the conversion of a case involving the Company to a
case under Chapter 7.
(e) Executive shall not be required to mitigate the amount of any payment
provided for in this Section 7 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section 7 be reduced by any
compensation earned by Executive as the result of Executive's employment by
another employer or business or by profits earned by Executive from any other
source at any time before and after Executive date of termination.
8. Indemnification. The Employer shall indemnify and hold harmless the Executive
against any and all expenses reasonably incurred by her in connection with or
arising out of (a) the defense of any action, suit or proceeding in which she is
a party, or (b) any claim asserted or threatened against her, in either case by
reason of or relating to her being or having been an employee, officer or
director of the Company, whether or not she continues to be such an employee,
officer or director at the time of incurring such expenses, except insofar as
such indemnification is prohibited by law. Such expenses shall include, without
limitation, the fees and disbursements of attorneys, amounts of judgments and
amounts of any settlements, provided that such expenses are agreed to in advance
by the Employer. The foregoing indemnification obligation is independent of any
similar obligation provided in the Employer's Certificate of Incorporation or
Bylaws, and shall apply with respect to any matters attributable to periods
prior to the Effective Date, and to matters attributable to Executive's
employment hereunder, without regard to when asserted.
9. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of New York and
each Party agrees that in the event of a dispute relating to the terms hereof
the other will submit to the exclusive jurisdiction of the state or federal
courts sitting within the City of New York.
(b) If not terminated in accordance with its terms, this Agreement shall be
binding upon, and inure to the benefit of, the Parties, their heirs, legal
representatives, successors and permitted assigns.
(c) The invalidity or unenforceability of any provision hereof shall not in any
way affect the validity or enforceability of any other provision. This Agreement
reflects the entire understanding between the Parties.
(d) This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of the
Executive by the Employer and contains all of the covenants and agreements
between the parties with respect to such employment in any manner whatsoever.
Any modification or termination of this Agreement will be effective only if it
is in writing signed by the party to be charged.
(e) This Agreement may be executed by the parties in one or more counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
10. Notices. All notices relating to this Agreement shall be in writing and
shall be either personally delivered, sent by telecopy (receipt confirmed) or
mailed by certified mail, return receipt requested, to be delivered at such
address as is indicated below, or at such other address or to the attention of
such other person as the recipient has specified by prior written notice to the
sending party. Notice shall be effective when so personally delivered, one
business day after being sent by telecopy or five days after being mailed.
To the Employer:
Candie's, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Chief Executive Officer
With a copy in the same manner to:
Blank Rome Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
To the Executive:
Xxxxxxx Xxxxxx Xxxxx
00 Xxxxxxxx Xxxxx Xxxx
Xxxxx Xxxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the 1st day of February, 2004.
CANDIE'S, INC.
By:/s/ Xxxx Xxxx
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Xxxx Xxxx,
Chief Executive Officer
/s/ Xxxxxxx Xxxxxx Xxxxx
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Xxxxxxx Xxxxxx Xxxxx
