CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into as of the 20th day of
September, 1996, by and between AnnTaylor Stores Corporation, a Delaware
corporation ("ATSC"), AnnTaylor, Inc., a Delaware corporation and wholly owned
subsidiary of ATSC ("ATI" and, together with ATSC, "Xxx Xxxxxx"), Cygne Designs,
Inc., a Delaware corporation ("Cygne"), and Xx. Xxxxxxx X. Xxxxxx
("Consultant").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Stock and Asset Purchase Agreement, dated
as of June 7, 1996, as amended as of August 27, 1996, among ATSC, ATSI, Cygne
and Cygne Group (F.E.) Limited, a Hong Kong corporation and wholly owned
subsidiary of Cygne ("CGFE"), ATI acquired from Cygne (i) all of the shares of
common stock, par value $.01 per share, of CAT US, Inc., a Delaware corporation
("CAT-US"), owned by Cygne; and (ii) certain of the assets of Cygne's AnnTaylor
Woven Division (the "Division");
WHEREAS, pursuant to the Purchase Agreement, ATI acquired from CGFE all of
the shares of common stock, par value $1 HK per share, of C.A.T. (Far East)
Limited, a Hong Kong corporation ("CAT-Far East" and, together with CAT-US,
"CAT"), owned by CGFE;
WHEREAS, CAT serves as a fully dedicated sourcing capability for ATI;
WHEREAS, prior to the date hereof, Cygne, through the Division, served as a
private label designer, merchandiser and manufacturer of women's apparel for
ATI;
WHEREAS, Consultant is the Chairman and Chief Executive Officer of Cygne
with particular expertise regarding sourcing of fabric and materials,
particularly with respect to suppliers and factories in Hong Kong and Asia; and
WHEREAS, Xxx Xxxxxx, as partial consideration for the transactions
contemplated by the Purchase Agreement, desires to obtain, and Cygne and
Consultant desire that Consultant provide, information, consultation, advice and
other services in aid of Xxx Xxxxxx'x business, all subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, Xxx Xxxxxx, Cygne and Consultant, intending to be legally bound, agree
as follows:
1. Engagement of Consultant.
(a) Cygne hereby covenants and agrees to make make Consultant available to
provide services to Xxx Xxxxxx upon the terms and conditions set forth herein.
Consultant hereby agrees to act as a consultant to and on behalf of Xxx Xxxxxx
in accordance with the terms and conditions set forth herein. Cygne, Consultant
and Xxx Xxxxxx agree that Consultant will provide services to Xxx Xxxxxx not in
excess of thirty percent (30%) of his business time and that Consultant will
continue his duties as Chairman and Chief Executive Officer of Cygne. Cygne
agrees to allow Consultant reasonable time to perform his duties as a consultant
to Xxx Xxxxxx on a timely basis, provided, however, that the performance of such
duties shall be at mutually agreeable times that do not unreasonably interfere
with Consultant's continuing obligations to Cygne.
(b) Cygne shall cause Consultant to, at the request of the President of Xxx
Xxxxxx, provide Xxx Xxxxxx information, consultation and advice on fabric and
material sourcing, particularly with respect to suppliers and factories in Hong
Kong and Asia.
(c) Cygne shall cause Consultant, and Consultant hereby agrees, to
diligently and faithfully serve Xxx Xxxxxx and to devote his reasonable best
efforts, his highest talents and skills, and all necessary time and attention in
providing the information, consultation and advice requested pursuant to
paragraph (b) of this Section 1; provided that Consultant shall not, without the
consent of Cygne and Consultant, be required to travel outside HongKong. Cygne
hereby consents to the allocation of up to thirty percent (30%) of Consultant's
business time to perform services under this Agreement.
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2. Term of Agreement. Unless terminated at an earlier date in accordance
with Section 4 of this Agreement, the term of this Agreement shall commence on
the date of this Agreement and shall end on the third anniversary thereof (the
"Expiration Date").
3. Payment for Services.
(a) Consultant's Fee. In consideration of Cygne causing Consultant to
perform the services provided for in this Agreement, Xxx Xxxxxx shall pay to
Cygne, at such time and in the manner as set forth in Section 3(b) hereof, a fee
of $225,000 per year (the "Consultant's Fee"). Xxx Xxxxxx shall not provide
Consultant with any compensation or benefits, including, but not limited to,
medical or pension benefits, bonuses or vacation, holiday or sick pay.
(b) Time Of Payment. The Consultant's Fee shall be due and payable to Cygne
by Xxx Xxxxxx in quarterly installments commencing on the date hereof; provided,
however, that the first installment shall be prorated to reflect the remaining
days of the current fiscal quarter.
(c) Reimbursement Of Expenses. Xxx Xxxxxx shall reimburse Cygne or
Consultant, as the case may be, for all reasonable out-of-pocket expenses
incurred by Cygne or Consultant in connection with the performance of
Consultant's services hereunder in accordance with AnnTaylor's travel policies.
4. Termination.
(a) Death. This Agreement shall terminate upon the Consultant's death.
(b) Termination by Default. Each of the following shall constitute, without
limitation or restriction, an event of default under this Agreement, in which
case, the non-defaulting party may give the other notice that this Agreement
shall terminate on the date selected by the non-defaulting party and set forth
in such notice (the "Termination Date"), unless cured as specified below:
(i) If either Xxx Xxxxxx or Cygne shall, whether by action or
inaction, breach in any material respect any obligation under this
Agreement, including a material failure by Consultant to perform his duties
and responsibilities hereunder, and such breach is not remedied within
thirty (30) days after written notice thereof from the non-defaulting
party;
(ii) If, for any reason, Consultant shall be convicted of a felony; or
if Consultant shall be convicted of any other crime as a result of which
his ability to perform the services described in Section 1 hereof is
materially impaired;
(iii) If there has been fraud, bad faith or willful misconduct on the
part of Cygne or Consultant in connection with the performance of
Consultant's duties and responsibilities hereunder;
(iv) If Xxx Xxxxxx institutes proceedings relief under the United
States Bankruptcy Code or any similar law, or consents to entry of an order
for relief against it in any bankruptcy or insolvency proceeding or similar
proceeding, or files a petition or answer or consent for reorganization or
other relief under any bankruptcy act or similar law, or consents to the
filing against it, of any petition for the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
it, or of any substantial part of its property, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due, or fails to pay its debts as they become due or
takes any action in furtherance of the foregoing; or
(v) If Cygne or Consultant breaches in any manner Section 5 hereof.
(c) Effect of Termination. Upon termination of this Agreement, Cygne's
obligation to cause Consultant to provide services to Xxx Xxxxxx hereunder, and
Xxx Xxxxxx'x obligation to make payment to Cygne under Section 3 hereof, shall
terminate, except that AnnTaylor shall be obligated to reimburse all expenses
incurred through the termination date in accordance with Section 3(b) hereof.
5. Confidentiality.
(a) Proprietary Information. Each of Cygne and Consultant acknowledges and
agrees that during the course of the provision of Consultant's services to Xxx
Xxxxxx, Consultant may be exposed to sensitive data and information concerning
the business and affairs of Xxx Xxxxxx, including, without limitation, fabric,
product and merchandise designs, and that all of such data and information,
financial plans, financial results, quantity or assortment of merchandise orders
or plans and inventory levels (collectively, the "Proprietary Information") are
vital, sensitive, confidential and proprietary to Xxx Xxxxxx.
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(b) Consultant's Agreement. In consideration of the Purchase Price (as
defined in the Purchase Agreement) to be paid by Xxx Xxxxxx to Cygne in
connection with the transactions contemplated by the Purchase Agreement,
Consultant agrees to the covenants and restrictions set forth in this Section 5.
(c) Cygne's Agreement. In consideration of the Purchase Price to be paid by
Xxx Xxxxxx to Cygne in connection with the transactions contemplated by the
Purchase Agreement, Cygne agrees to the covenants and restrictions set forth in
this Section 5.
(d) Trade Secret Status. Each of Cygne and Consultant expressly
acknowledges the trade secret status of the Proprietary Information and
acknowledges that the Proprietary Information constitutes a protectable business
interest of Xxx Xxxxxx, and covenants and agrees that during the term of the
engagement hereunder and at all times after the expiration or termination of
such engagement, neither Cygne nor Consultant shall, directly or indirectly,
whether, in the case of Consultant, individually, as a director, stockholder,
owner, partner, employee, principal or agent of or consultant to any business,
or in any other capacity, make known, disclose, furnish, make available or
utilize any of the Proprietary Information, other than in the proper performance
of the duties contemplated herein during the term of the engagement hereunder.
Cygne's and Consultant's obligations under this Section 5(d) with respect to
particular Proprietary Information shall terminate only at such time (if any) as
the Proprietary Information in question becomes generally known to the public
other than through a breach of either Cygne's or Consultant's obligations
hereunder.
(e) Return of Proprietary Information. Each of Cygne and Consultant
acknowledges and agrees that all records or documents containing Proprietary
Information prepared by Consultant or coming into his possession by virtue of
the engagement are and shall remain the property of Xxx Xxxxxx and that, upon
termination or expiration of this engagement, Consultant shall return
immediately to Xxx Xxxxxx all such items in his possession, together with all
copies and extracts, and will destroy all summaries thereof and any such
information stored electronically on tapes, computer disks or in any other
manner.
(f) Consultant Non-solicitation. Consultant agrees that during the term of
this Agreement and for a period of one (1) year thereafter he shall not,
directly or indirectly, induce or solicit (or authorize or assist in the taking
of any such actions by any third party) any employee or consultant of Xxx Xxxxxx
to leave his or her business association with Xxx Xxxxxx.
(g) Cygne Non-Solicitation. Cygne agrees that during the term of this
Agreement and for a period of one (1) year thereafter it shall not, directly or
indirectly, induce or solicit (or authorize or assist in the taking of any such
actions by any third party) any employee or consultant of Xxx Xxxxxx to leave
his or her business association with Xxx Xxxxxx.
(h) Xxx Xxxxxx Non-Solicitation. Xxx Xxxxxx agrees that during the term of
this Agreement and for a period of one (1) year thereafter it shall not,
directly or indirectly, induce or solicit (or authorize or assist in the taking
of any such actions by any third party) any employee or consultant of Cygne to
leave his or her business association with Cygne.
(i) Acknowledgment. Consultant and Cygne acknowledge and agree that the
covenants set forth in this Section 5 and each subsection hereof are reasonable
and necessary for the protection of Xxx Xxxxxx'x business interests, that
irreparable injury will result to Xxx Xxxxxx if Consultant or Cygne breaches any
of the terms of said covenants, and that in the event of Consultant's or Cygne's
actual or threatened breach of any such covenants, Xxx Xxxxxx will have no
adequate remedy at law. Cygne and Consultant accordingly agree that in the event
of any actual or threatened breach by Consultant of any of said covenants, Xxx
Xxxxxx shall be entitled to immediate injunctive and other equitable relief
without bond and without the necessity of showing actual monetary damages. Cygne
accordingly agrees that in the event of any actual or threatened breach by Cygne
of any of said covenants, Xxx Xxxxxx shall be entitled to immediate injunctive
and other equitable relief without bond and without the necessity of showing
actual monetary damages. Notwithstanding the provisions of Section 9 hereof,
such equitable relief may be sought in any court of competent jurisdiction.
Nothing contained herein shall be construed as prohibiting Xxx Xxxxxx from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of any damages which it is able to prove.
(j) The provisions of this Section 5 shall survive the expiration or
termination of this Agreement, and any of the arrangements contained herein, and
shall be binding upon Consultant's, Cygne's and Xxx Xxxxxx'x corporate or
personal successors and assigns.
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6. Representations and Warranties of Consultant. Consultant represents and
warrants to Cygne and Xxx Xxxxxx that he has full legal power and authority to
enter into this Agreement, perform all of his obligations hereunder and to
consummate the transactions contemplated hereby.
7. Consultant's Independence and Discretion.
(a) Nothing herein contained shall be construed to constitute the parties
hereto as partners or as joint venturers, or as agent of the others, or, as
between Xxx Xxxxxx and Consultant, as employer and employee. By virtue of the
relationship described herein, Consultant's relationship to Xxx Xxxxxx during
the term of this Agreement shall only be that of an independent contractor and
the Consultant shall perform all services pursuant to this Agreement as an
independent contractor. The Consultant shall not provide any services under Xxx
Xxxxxx'x business name and shall not present himself as an agent or employee of
Xxx Xxxxxx and shall have no authority to enter into any binding obligation on
behalf of Xxx Xxxxxx.
(b) Subject to the terms of this Agreement, the manner, means, details or
methods by which the Consultant performs his obligations under this Agreement
shall be determined by Cygne, subject to the reasonable satisfaction of Xxx
Xxxxxx.
(c) Each of Cygne and Consultant acknowledges and agrees that Xxx Xxxxxx
shall not provide to Consultant any unemployment, disability, workers'
compensation or medical insurance or any other employee benefits. Payments to
Cygne under Section 3 hereof shall not be subject to withholding taxes or other
employment taxes.
8. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration before three
(3) arbitrators selected in accordance with the Commercial Arbitration Rules of
the American Arbitration Association in the City of New York. Arbitration as
provided herein shall be the exclusive means for determination of all matters as
above provided, and any decision and award of the arbitrators shall be final,
binding and conclusive upon the parties and such decision and award may be
entered as a final judgment in any court of competent jurisdiction. Except as
provided in Section 5(j) hereof, none of the parties shall institute any action
or proceeding in any court of law or equity, state or federal, other than as may
be necessary for purposes of enforcement of the arbitrators' decision and award
hereunder.
9. Consultant's Employment. Cygne and Consultant hereby acknowledge that
Consultant's execution of this Agreement is a condition to Consultant's
continued employment with Cygne.
10. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally,
by mail (certified or registered mail, return receipt requested), by reputable
overnight courier or by facsimile transmission (receipt of which is confirmed):
(a) If to ATSC or ATI, to:
AnnTaylor Stores Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx Chuff, Esq.
Facsimile: (000) 000-0000
(b) If to Cygne, to:
Cygne Designs, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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with a copy to:
Fulbright and Xxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(c) If to Consultant, to:
Cygne Designs, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing, given in accordance with this Section 10 to the other parties hereto.
All such notices, requests, demands, waivers and communications shall be deemed
to have been given on the date on which so hand-delivered, on the third business
day following the date on which so mailed, on the next business day following
the date on which delivered to such overnight courier and on the date of such
facsimile transmission and confirmation, except for a notice of change of person
or address, which shall be effective only upon receipt thereof.
11. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior agreements and understandings, oral and written, with
respect to its subject matter.
12. Severability. Should any provision of this Agreement, or any part
thereof, for any reason be declared invalid or unenforceable, such declaration
shall not affect the validity or enforceability of any other provision of this
Agreement, or any other part thereof, all of which other provisions, and parts,
shall remain in full force and effect, and the application of such invalid or
unenforceable provision, or such part thereof, to persons or circumstances other
than those as to which it is held invalid or unenforceable shall be valid and be
enforced to the fullest extent permitted by law.
13. Binding Effect; 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, executors, successors and permitted assigns, but, except
as contemplated herein, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, directly or indirectly, by ATSC,
ATI, Cygne or Consultant without the prior written consent of the other parties
hereto; provided, however, that ATSC or ATI may assign any or all of its rights,
interests or obligations hereunder to any one or more, direct or indirect,
wholly owned subsidiaries of ATSC or ATI, provided, however, that no such
assignment by ATSC or ATI shall limit or affect ATSC's or ATI's obligations
hereunder; provided, further, however, that this Agreement shall automatically
be assigned to and assumed by Consultant in the event that (i) Consultant's
employment with Cygne is terminated; or (ii) Cygne is liquidated or dissolved,
whether through Chapter 7 of the U.S. Bankruptcy Laws or otherwise; provided,
however, that Consultant hereby agrees, in the event of any such assignment by
Cygne and assumption by Consultant, to assume and perform all of Cygne's
obligations hereunder, to the extent applicable.
14. Amendment, Modification And Waiver. This Agreement may be amended,
modified or supplemented at any time by written agreement of the parties hereto.
Any failure by Cygne or Consultant, on the one hand, or ATSC or ATI, on the
other hand, to comply with any term or provision of this Agreement may be waived
by ATSC, ATI, Cygne or Consultant, respectively, at any time by an instrument in
writing signed by or on behalf of ATSC, ATI, Cygne or Consultant, but such
waiver or failure to insist upon strict compliance with such term or provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure to comply.
15. Third-Party Beneficiaries. Except as otherwise expressly provided
herein, this Agreement is not intended, and shall not be deemed, to confer upon
or give any person except the parties hereto and their respective successors and
permitted assigns, any remedy, claim, liability, reimbursement, cause of action
or other right under or by reason of this Agreement.
16. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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17. Interpretation. The section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement. As used in this Agreement, the term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
18. Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first above written.
ANNTAYLOR STORES CORPORATION
By /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President-Finance
ANNTAYLOR, INC.
By /s/ XXXXXX X. XXXXX
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President-Finance
CYGNE DESIGNS, INC.
By /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
CONSULTANT
By /s/ XXXXXXX X. XXXXXX
------------------------------------
Xxxxxxx X. Xxxxxx
Consultant
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