EXHIBIT NO. 10.31
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
▇▇▇▇▇▇ FASHIONS CORPORATION
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
THIS AGREEMENT is effective as of March 1, 2000, by and between ▇▇▇▇▇▇
Fashions Corporation, a corporation duly organized and existing under the laws
of the State of Delaware (the "Corporation") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
("Executive").
BACKGROUND
The Executive presently serves in an executive capacity with the
Corporation pursuant to an Executive Employment Agreement dated as of March 1,
1998 (the "Prior Agreement"). The Executive and the Corporation desire to
terminate and replace the Prior Agreement in full with this Agreement.
ARTICLE 1
EMPLOYMENT
1.1 The Corporation hereby employs Executive, and Executive agrees to work
for the Corporation as President and Chief Operating Officer, and to perform
such related duties as are assigned to him from time to time by the Board of
Directors of the Corporation.
ARTICLE 2
TERM
2.1 The term of this Agreement shall be for a period three (3) years
commencing the date of this Agreement, unless sooner terminated as hereinafter
provided. The Agreement shall thereafter continue in effect from year to year
unless either party provides ninety (90) days written notice of termination.
ARTICLE 3
DUTIES
3.1 Executive agrees, unless otherwise specifically authorized by the
Board of Directors of the Corporation, to devote his full time and effort to the
best of his abilities to his duties for the profit, benefit and advantage of the
business of the Corporation. Executive shall report directly to the Chief
Executive Officer.
ARTICLE 4
COMPENSATION AND BENEFITS
4.1 The Corporation agrees to pay Executive an annual base salary as
follows:
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YEAR ENDING FEBRUARY 28, BASE SALARY
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2001 $260,000
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2002 $290,000
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2003 $325,000
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The increase in the base salary for the years ending February 28, 2002 and 2003
is contingent upon the Corporation achieving a "Pre-Tax Profit" for each year
greater than (i) the Pre-Tax Profit for the Corporation's fiscal year ended
February 28, 2000 and (ii) the Pre-Tax Profit for the Corporation's prior fiscal
year. In the event such conditions are not met, the Executive's base salary
shall remain unchanged for the following year. For purposes of this paragraph,
"Pre-Tax Profit" shall be calculated in accordance with generally accepted
accounting principles. The annual base salary shall be payable at those
intervals as the Corporation shall pay other executives. After February 28,
2003, the annual base salary shall be reviewed annually and increases, if any,
shall be awarded to Executive by the Board of Directors in its sole discretion,
but such base compensation shall not be reduced from that of the prior year.
4.2 Subject to the terms and conditions of such plans and programs, the
Executive shall be entitled to participate in the various employee benefit plans
and programs applicable to senior executives of the Corporation, including but
not limited to medical, life and other benefits as well as vacations, which
shall be at such times as reasonably determined by the Board of Directors of the
Corporation.
4.3 The Executive shall be eligible to receive a bonus in accordance with
the Corporation's bonus plans as in effect and approved by the Board of
Directors from time to time.
4.4 The Corporation shall pay to the Executive a car allowance of
$1,000.00 per month.
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ARTICLE 5
INSURANCE
5.1 The Corporation, at its own expense, shall provide life insurance
coverage on the Executive's life. The death benefit shall be in the amount of
$600,000, in the form of term insurance. The death benefit shall be payable to
the Executive's designated beneficiary. The Executive shall have full
discretion to name the beneficiary of the portion of the insurance provided for
benefit of the Executive. The Corporation shall have the right at its own
expense and for its own benefit to purchase additional insurance on the
Executive's life, and the Executive shall cooperate by providing necessary
information, submitting to required medical examinations, and otherwise
complying with the insurance carrier's requirements.
5.2 The Executive shall be entitled to disability insurance in line with
the present policy of the Corporation, to be provided at the expense of the
Corporation.
ARTICLE 6
DEFINITIONS
6.1 "Cause" shall mean (i) any fraud, misappropriation or embezzlement by
Executive in connection with the business of the Corporation, (ii) any
conviction of a felony or a gross misdemeanor by Executive that has or can
reasonably be expected to have a detrimental effect on the Corporation, (iii)
any gross neglect or persistent neglect by Executive to perform the duties
assigned to him hereunder or any other act that can be reasonably expected to
cause substantial economic or reputational injury to the Corporation or (iv) any
material breach of Sections 7 or 8 of this Agreement, provided that the
existence of such neglect or material breach shall be determined by the written
agreement of the majority of the directors. If Executive is a member of the
Board of Directors, he shall not vote on any such determination of "Cause," nor
shall he be counted for purposes of determining a majority of the directors.
Provided further that in connection with an event described in Section 6.1(iii)
above, Executive shall first have received a written notice from the Corporation
which sets forth in reasonable detail the manner in which Executive has grossly
or persistently neglected his duties and Executive shall have a period of ten
(10) days to cure the same, but the Corporation shall not be required to give
written notice of, nor shall Executive have a period to cure, the same or any
similar gross or persistent neglect or material breach which the Corporation has
previously given written notice to Executive hereunder and Executive has cured
such neglect or breach.
6.2 A "Change of Control" shall be deemed to have occurred if (i) there
shall be consummated (A) any consolidation or merger in which the Corporation is
not the continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a consolidation or a merger having the same proportionate
ownership of common stock of the surviving corporation immediately after the
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consolidation or merger or (B) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions other than in the ordinary
course of business of the Corporation) of all, or substantially all, of the
assets of the Corporation to any corporation, person or other entity which is
not a direct or indirect wholly-owned subsidiary of the Corporation, or (ii) any
person, group, corporation or other entity (collectively, "Persons") shall
acquire beneficial ownership (as determined pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, and rules and regulations
promulgated hereunder) of 50% or more of the Corporation's outstanding common
stock.
6.3 "Confidential Information" means any information that is not generally
known, including trade secrets, outside the Corporation and that is proprietary
to the Corporation, relating to any phase of the Corporation's existing or
reasonably foreseeable business which is disclosed to Executive during
Executive's employment by the Corporation including information conceived,
discovered or developed by Executive. Confidential Information includes, but is
not limited to, business plans; financial statements and projections; operating
forms (including contracts) and procedures; payroll and personnel records;
marketing materials and plans; proposals; supplier information; customer
information; software codes and computer programs; customer lists; project
lists; project files; training manuals; policies and procedures manuals; health
and safety manuals; target lists for new stores and information relating to
potential new store locations; price information and cost information;
administrative techniques or documents or information that is designated by the
Corporation as "Confidential" or similarly designated.
6.4 A "Competitor" means any person or organization which is a women's
specialty apparel retailer whose operations compete with more than twenty
percent (20%) of the Corporation's regular store locations or twenty percent
(20%) of the Corporation's "Large Size" store locations as existing on the date
of termination of Executive. Irrespective of the foregoing sentence, companies
which are deemed Competitors shall include ▇▇▇▇ ▇▇▇▇▇▇ Stores, Inc., Kohls
Department Stores, Maurices (a division of Amcena), Catherine's Stores, Cato,
Talbot's, The Limited (including subsidiaries), Dress Barn, United Retail and
Charming Shoppes.
ARTICLE 7
NONCOMPETITION AND NONSOLICITATION
7.1 During Executive's employment, Executive will not plan, organize or
engage in any business competitive with any product or service marketed or
planned for marketing by the Corporation or conspire with others to do so.
7.2 For a period of one year after termination of Executive's employment
with the Corporation, Executive will not, without the written permission of the
Corporation, (i) directly or indirectly engage in activities with a Competitor
or (ii) own (whether as a shareholder, partner or otherwise, other than as a 5%
or less shareholder of a publicly held company), or (iii) be connected as an
officer, director, advisor, consultant or employee of or participate in the
management of any Competitor.
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7.3 For a period of two years after termination of Executive's employment
with the Corporation, Executive will not solicit, entice, or induce (or attempt
to do so, directly or indirectly), any employee of the Corporation to be
employed by any other party.
ARTICLE 8
CONFIDENTIAL INFORMATION AND TRADE DOCUMENTS
8.1 Unless authorized in writing by the Corporation, Executive will not
directly or indirectly divulge, either during or after the term of his
employment, or until such information becomes generally known, to any person not
authorized by the Corporation to receive or use it any Confidential Information
for any purpose whatsoever.
8.2 All documents or other tangible property relating in any way to the
business of the Corporation which are conceived by Executive or come into his
possession during his employment shall be and remain the exclusive property of
the Corporation and Executive agrees to return all such documents and tangible
property to the Corporation upon termination of his employment, or at such
earlier time as the Corporation may request of Executive.
ARTICLE 9
JUDICIAL CONSTRUCTION
9.1 Executive believes and acknowledges that the provisions contained in
this Agreement, including the covenants contained in Articles 7 and 8 of this
Agreement, are fair and reasonable. Nonetheless, it is agreed that if a court
finds any of these provisions to be invalid in whole or in part under the laws
of any state, such finding shall not invalidate the covenants, nor the Agreement
in its entirety, but rather the covenants shall be construed and/or bluelined,
reformed or rewritten by the court as if the most restrictive covenants
permissible under applicable law were contained herein.
ARTICLE 10
RIGHT TO INJUNCTIVE RELIEF
10.1 Executive acknowledges that a breach by the Executive of any of the
terms of Articles 7 and 8 of this Agreement will render irreparable harm to the
Corporation. Accordingly, the Corporation shall therefore be entitled to any
and all equitable relief, including, but not limited to, injunctive relief, and
to any other remedy that may be available under any applicable law or agreement
between the parties, and to recover from the Executive all costs of litigation
including, but not limited to, attorneys' fees and court costs.
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ARTICLE 11
CHANGE OF CONTROL
11.1 If a Change of Control shall occur during the term of this Agreement,
all unvested rights to purchase stock under outstanding stock options held by
Executive shall vest immediately for the benefit of the Executive and the Board
of Directors will use its reasonable efforts to register such shares under the
Securities Act of 1933, as amended, if necessary.
11.2 If a Change of Control shall occur, the Executive shall be entitled to
receive from the Corporation or its successor the full base salary of Executive
under this Agreement for one (1) year in one cash installment. This payment
shall be made by the Corporation within ten (10) business days of consummating
the terms and conditions of the transaction which give rise to the Change of
Control.
ARTICLE 12
TERMINATION (OTHER THAN FROM A CHANGE IN CONTROL)
12.1 The Corporation may terminate the employment of the Executive at any
time without cause by written notice of termination of employment to Executive.
In the event that the Corporation terminates the employment of the Executive by
delivering notice in accordance with the preceding sentence, the Executive shall
receive as severance his base salary and benefits pursuant to Section 4 (except
bonus) from the date of termination until the later to occur of (i) March 1,
2003 or (ii) twelve (12) months from the date of the notice of termination;
PROVIDED, HOWEVER, if the Executive shall secure other employment or a
consulting position, the preceding severance amounts payable to the Executive by
the Corporation shall be offset and reduced by such other cash compensation the
Executive earns through such other employment or consulting arrangements through
March 1, 2003. Notwithstanding the foregoing, upon termination, Executive shall
no longer be eligible under any of the Corporation's bonus plans.
12.2 The Corporation may terminate the Executive's employment at any time
for Cause and at such time all compensation and benefits provided to Executive
under this Agreement shall immediately cease, subject to applicable employment
laws and regulations.
12.3 This Agreement will terminate upon Executive's death or upon
Executive's disability that prevents him from performing his duties under this
Agreement for a continuous period of six months or for periods aggregating nine
months in any eighteen (18) month period.
ARTICLE 13
ASSIGNMENT
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13.1 The Corporation shall not have the right to assign this Agreement to
its successors or assigns without the written consent of the Executive;
provided, however, the Corporation shall have the right to assign this Agreement
to any subsidiary, and all covenants or agreements hereunder shall inure to the
benefit of and be enforceable by or against its successors or assigns.
13.2 The terms "successors" and "assigns" shall include any corporation
which buys all or substantially all of the Corporation's assets, or a
controlling portion of its stock, or with which it merges or consolidates.
ARTICLE 14
FAILURE TO DEMAND PERFORMANCE AND WAIVER
14.1 The Corporation's failure to demand strict performance and compliance
with any part of this Agreement during the Executive's employment shall not be
deemed to be a waiver of the Corporation's rights under this Agreement or by
this operation of law. Any waiver by either party of a breach of can any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach thereof.
ARTICLE 15
ENTIRE AGREEMENT
15.1 The Corporation and Executive acknowledge that this Agreement contains
the full and complete agreement between and among the parties, that there are no
oral or implied agreements or other modifications not specifically set forth
herein, and that this Agreement supersedes any prior agreements or
understandings, if any, between the Corporation and Executive, whether written
or oral. In particular, this Agreement supercedes and replaces in full the
Prior Agreement. The parties further agree that no modifications of this
Agreement may be made except by means of a written agreement or memorandum
signed by the parties.
ARTICLE 16
GOVERNING LAW
16.1 The parties acknowledge that the Corporation's principal place of
business is located in the State of Minnesota. The parties hereby agree that
this Agreement shall be construed in accordance with the internal laws of the
State of Minnesota without regard to the conflict of laws thereof.
* * * * * * * * * *
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IN WITNESS WHEREOF, the Corporation has hereunto signed its name and the
Executive hereunder has signed his name, all as of the day and year first above
written.
▇▇▇▇▇▇ FASHIONS CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Witness Its: CEO
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EXECUTIVE
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Witness ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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