EXHIBIT 99.3
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EMPLOYMENT AGREEMENT
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This Agreement (the "Agreement") dated as of August 10, 1999 is made by
and among Aris Industries, Inc., a New York corporation (the "Company"), Europe
Craft Imports, Inc. ("ECI"), ECI Sportswear, Inc. ("Sportswear") and XOXO
Clothing Company, Incorporated (formerly known as XOXO Acquisition Corp.), a
Delaware corporation ("XOXO" and together with ECI and Sportswear, the
"Subsidiaries"), and Xxxxx Xxxxx (the "Executive"). The Company and the
Subsidiaries are collectively referred to in this Agreement as the "Company"
unless otherwise required by the specific context of a particular provision
hereof.
R E C I T A L S:
WHEREAS, simultaneously with the execution hereof, upon the
terms and subject to the conditions of that certain Agreement and Plan of
Merger, as amended (the "Merger"), Lola, Inc. ("Lola") is being merged with and
into ECI, which shall be the surviving corporation in the Merger and the
separate existence of Lola shall cease;
WHEREAS, immediately following the Merger, ECI is contributing to XOXO
all of the assets and business owned and operated by Lola;
WHEREAS, the Company desires to hire the Executive as, (1) Vice
Chairman of the Board of Directors of the Company, (2) Chief Executive Officer
of XOXO and all divisions of the Company, the Subsidiaries and such future
direct or indirect subsidiaries of the Company engaged in the female apparel
industry and related or ancillary industries as Executive shall determine, and
as (3) Chief Executive Officer, President, or in such other senior executive
position with respect to any other Subsidiaries and such future direct or
indirect subsidiaries of
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the Company as the Executive and the Chairman of the Company shall mutually
determine, and the Executive is willing to accept such employment on the terms
set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and other good and valuable consideration, the Company, the
Subsidiaries and the Executive hereby agree as follows:
1. Definitions.
1.1 "Affiliate" means any Person controlling, controlled by or under
common control with the Company.
1.2 "Board" means the Board of Directors of the Company and/or the
Subsidiaries.
1.3 "Cause" means (a) the Executive is convicted of or pleads guilty to
a felony involving dishonesty as against the Company or the Subsidiaries, (b)
the Executive is convicted of a felony not involving the Company, and after
exhausting all rights of appeal, is obligated to serve, and actually serves, ten
(10) or more days in prison or pay a fine of more than Five Hundred Thousand
($500,000) Dollars, or (c) the Executive, in carrying out the Executive's duties
and responsibilities under this Agreement, is guilty of gross neglect or gross
misconduct resulting, in either case, in material economic harm to the Company
and/or the Subsidiaries, unless such act, or failure to act, was reasonably
believed by the Executive in good faith, using reasonable judgment under the
circumstances, to be in the best interests of the Company and/or the
Subsidiaries.
1.4 "Date of Termination" means (a) in the case of a termination for
which a Notice of Termination (as hereinafter defined in Section 6.6) is
required, the date of actual
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receipt of such Notice of Termination or, if later, the date specified therein,
as the case may be, and (b) in all other cases, the actual date on which the
Executive's employment terminates during the Term of Employment (as hereinafter
defined in Section 3) (it being understood that nothing contained in this
definition of "Date of Termination" shall affect any of the cure rights provided
to the Executive or the Company in this Agreement).
1.5 "Disability" means the Executive's inability to render, for a
period of nine consecutive months, services hereunder.
1.6 "Adjusted EBITDA" means for any fiscal year the sum of (a) the net
income of the Company on a consolidated basis for such fiscal year as determined
in accordance with GAAP except as specifically noted below in this definition,
(b) taxes in respect of income, (c) interest for money borrowed, (d)
depreciation, (e) amortization and (f) factoring fees, charges and expenses,
provided that the following shall be excluded from Adjusted EBITDA: (A)
extraordinary, unusual or non-recurring items, (B) gains and losses from
financing transactions and (C) gains and losses from the sale or other
disposition of material assets (other than inventory) outside of the ordinary
course of business; and (D) to the extent that, in connection with or otherwise
related to the performance of a material arrangement with a licensor in the year
such license arrangement is entered into the revenues, if any, associated with
such license are exceeded by the costs and expenses (including general and
administrative expenses related thereto) associated with such license (thereby
resulting in a net reduction in Adjusted EBITDA), provided that such excess is
included when calculating Adjusted EBITDA for the next fiscal year. It is
understood and agreed that there shall be an appropriate calculation so that the
amount
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of any bonus payable in respect of any fiscal year pursuant to Section 5.2 shall
not reduce the Adjusted EBITDA for the purpose of calculating the bonus under
Section 5.2.
1.7 "Good Reason" means and shall be deemed to exist if (a) without the
Executive's express prior written consent, the Executive is assigned any duties
or responsibilities inconsistent in any material respect with the scope of the
duties or responsibilities associated with the Executive's title or positions,
as set forth and described in Article 4 of this Agreement; (b) without the
Executive's express prior written consent, the Executive suffers, in any
material respect, a reduction in the duties, responsibilities or effective
authority associated with Executive's titles and positions as set forth and
described in Article 4 of this Agreement; (c) without the Executive's express
prior written consent, the Executive is not appointed to and/or elected to, or
is removed from, the offices or positions provided for in Section 4.1 of this
Agreement (whether or not the Company uses its best efforts to cause the
Executive to be elected as a director of the Company); (d) the Company fails to
substantially perform or otherwise substantially breaches any material term or
provision of this Agreement; (e) without the Executive's express prior written
consent, and except as provided in Section 5.2 hereof, the Executive's
compensation under this Agreement is decreased, or the Executive's benefits
under employee benefit or health or welfare plans or programs of the Company are
in the aggregate materially decreased; (f) the Company fails to obtain the full
assumption of this Agreement by a successor entity in accordance with Section
12.2 of this Agreement; (g) the Company fails to use reasonable efforts to
maintain, or cause to be maintained, directors and officers liability insurance
coverage for the Executive as provided in Section 13.10 of this Agreement; (h)
the Company purports to terminate the Executive's employment for Cause and the
Company is not entitled to
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terminate this Agreement for Cause; (i) Executive is required to relocate his
office more than 15 miles out of Los Angeles County; (j) Xxxxxx Xxxxx ("Xxxxx")
is no longer Chairman of the Board of the Company or if Executive is required to
report to any individual other than Simon; or (k) the Chairman terminates any
employee of XOXO without Executive's prior consent.
1.8 "Person(s)" means any individual or entity of any kind or nature,
including any other person as defined in Section 3(a)(9) of the Exchange Act,
and as used in Sections 13(d) and 14(d) thereof.
2. Employment. Subject to the terms and provisions set forth in this
Agreement, the Company and each Subsidiary hereby employs the Executive during
the Term of Employment as the President of each Company.
3. Term of Employment. The term of employment under this Agreement
shall be deemed to commence as of August 10, 1999 (the "Commencement Date") and,
unless terminated earlier pursuant to the terms hereof, shall terminate on
August 9, 2004 (the "Term of Employment").
4. Positions, Responsibilities and Duties.
4.1 Positions. During the Term of Employment, the Executive shall be
employed as, and the Company shall at all times cause the Executive to be, (1)
Vice Chairman of the Board of Directors of the Company, (2) Chief Executive
Officer of XOXO and all divisions of the Company, the Subsidiaries and such
future direct or indirect subsidiaries of the Company engaged in the female
apparel industry and related or ancillary industries as Executive shall
determine, and as (3) Chief Executive Officer, President, or in such other
senior executive position with respect to any other Subsidiaries and such future
direct or indirect subsidiaries of
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the Company as the Executive and the Chairman of the Company shall mutually
determine. In such positions, the Executive shall have the duties,
responsibilities and authority normally associated with such positions. The
Executive shall report solely and directly to the Chairman and the Board of
Directors of the Company, and all employees of the Company and all of the
Subsidiaries and such future direct or indirect subsidiaries of the Company
engaged in the apparel industry for which the Executive serves as Chief
Executive Officer shall report to Executive. Executive shall be entitled to
serve on such committees of the Company's board of directors as Simon serves on.
4.2 Duties. During the Term of Employment, the Executive shall devote
such business time and attention to the business of the Company as the Executive
deems necessary to perform faithfully and efficiently the duties and
responsibilities contemplated by this Agreement; provided, however, that the
Executive shall be allowed, to the extent such activities do not substantially
interfere with the performance of the Executive's duties and responsibilities
hereunder, to (a) manage the Executive's personal financial and legal affairs,
and (b) engage in other businesses so long as they do not compete with the
Company.
5. Compensation and Other Benefits.
5.1 Base Salary. During the Term of Employment, the Executive shall
receive a base salary of no less than $750,000 per annum ("Base Salary") payable
in equal monthly installments. Such Base Salary shall be reviewed annually for
increase (but not decrease) in the sole discretion of the Board. In conducting
any such annual review, the Board shall take into account any change in the
Executive's responsibilities, increases in the compensation of other
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executives of the Company or the Subsidiaries or of competitors of either, the
performance of the Executive and other pertinent factors. The increased Base
Salary shall then constitute the "Base Salary" for purposes of this Agreement.
5.2 Annual Bonus. For each Calendar Year during the Term (and in
addition to the Base Salary), the Executive shall be entitled to receive an
annual cash bonus payment (the "Bonus") determined as follows:
If Adjusted EBITDA is: Amount of Bonus
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Less than $5 million -0-
Between $5 million - 2% of Adjusted EBITDA
$10 million
Over $10 million 3% of Adjusted EBITDA
The Annual Bonus shall be paid to the Executive in cash as soon as
practicable after the end of the fiscal year to which it relates, but in any
event no later than one hundred five (105) calendar days after the end of such
fiscal year (and, to the extent there is any disagreement as to the amount
thereof any amount acknowledged as payable by the Company shall be paid by such
date).
5.3 Intentionally Omitted.
5.4 Incentive, Retirement, and Savings Plans. During the Term of
Employment, the Executive shall be entitled to participate in all incentive,
pension, retirement, savings and other employee benefit plans and programs
maintained by the Company and/or the Subsidiaries for the benefit of senior
executives.
5.5 Welfare Benefit Plans. During the Term of Employment, the
Executive, the Executive's spouse and their eligible dependents, if any, shall
be entitled to participate in and
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be covered under all the welfare benefit plans or programs maintained by the
Company and/or the Subsidiaries, including, without limitation, all term life
insurance, long term disability insurance, medical, hospitalization, dental,
disability, accidental death and dismemberment and travel accident insurance
plans and programs. All premiums and other costs and expenses associated with
the participation by the Executive, his spouse and his eligible dependents, if
any, in the plans and/or programs referenced herein shall be borne in full by
the Company.
5.6 OMITTED
5.7 Expense Reimbursement. During the Term of Employment, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing the Executive's duties and
responsibilities hereunder in accordance with the policies and procedures of the
Company. The Company shall provide Executive with a Company credit card for use
for Company expenses. At the end of each fiscal year, the Executive and the
Company shall in good faith reconcile any differences and disputes with respect
to timing, right to reimbursement, reasonableness or documentation of any items
of expense reimbursement, it being agreed that no dispute respecting any of the
foregoing shall constitute a basis for the Executive or the Company (including
the Subsidiaries) terminating or attempting to terminate this Agreement.
5.8 Vacation and Fringe Benefits. During the Term of Employment, the
Executive shall be entitled to such paid vacation, fringe benefits and
perquisites as set forth in Schedule 5.8 or, if more favorable to the Executive,
as provided by the Company at any time hereafter.
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5.9 Office and Support Staff. Unless the Executive otherwise agrees in
writing, during the Term of Employment the Executive shall be entitled to
executive secretarial and other administrative assistance of a type and to the
extent, and to an office or offices (with furnishings and other appointments) of
a type and size, at least equal to that provided to the Executive currently.
6. Termination.
6.1 Termination Due to Death or Disability. The Company or the
Executive may terminate the Executive's employment hereunder due to his death or
Disability. In the event the Executive's employment is terminated due to death
or Disability, the Executive's estate or Executive's legal representative, as
the case may be, shall be entitled to:
(a) (i) in the case of death, (x) Base Salary continuation at the rate
in effect (as provided for by Section 5.1 of this Agreement) on the Date of
Termination for a period of three (3) months after the date of death, plus
(y) a death benefit in an amount equal to $5,000,000 (provided Executive is
insurable for such amount at regular rates) less any amounts paid pursuant
to the group and/or individual life insurance policies referred to in
Section 5.5 of this Agreement, and (ii) in the case of Disability, $30,000
per month for so long as the Executive is subject to a Disability or for
the unexpired portion of the Term.
(b) any Base Salary accrued or any Annual Bonus earned but not yet
paid;
(c) a pro rata Annual Bonus for the calendar year in which death or
Disability occurs (determined and payable in accordance with Section 5.2 of
this Agreement);
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(d) any deferred compensation not yet paid to the Executive
(including, without limitation, interest or other credits on such deferred
amounts) and any accrued vacation pay;
(e) reimbursement pursuant to Section 5.7 hereof or any other
provision of this Agreement for expenses incurred but not yet paid prior to
such death or Disability;
(f ) in the case of death, any other compensation and benefits as may
be provided in accordance with the terms and provision of any applicable
plans and programs of the Company and/or the Subsidiaries; and
(g ) in the case of Disability, (i) continuation of the Executive's
health and welfare benefits (as described in section 5.5 of this Agreement)
at the level in effect (as provided for by Section 5.5) on the Date of
Termination through the end of the three-year period following the
termination of the Executive's employment due to Disability (or the Company
shall provide the economic equivalent thereof), and (ii) any other
compensation and benefits as may be provided in accordance with the terms
and provisions of any applicable plans and programs of the Company. With
respect to the deferred compensation arrangements referred to in Sections
6.1(d),
6.2(c) and 6.3(d), to the extent that such deferred compensation arrangements
provide by their terms for any deferral of payments in the event of death or
Disability, termination with Cause or termination without Cause or for Good
Reason, such payments shall be deferred in accordance with such arrangements to
the extent required by the type of termination of this Agreement. With respect
to the other benefits referred to in Sections 6.1(g), 6.2(e) and 6.3(g), to the
extent that such other benefit arrangements provide by their terms for any
deferral of payments in the
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event of death or Disability, termination with Cause or termination without
Cause or for Good Reason, such payments shall be deferred in accordance with
such arrangements to the extent required by the type of termination of this
Agreement.
6.2 Termination by the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause as provided in this Section 6.2;
provided that no act or omission referred to in Section 1.3(b) hereof occurring
prior to the Commencement Date shall constitute Cause. If the Company terminates
the Executive's employment hereunder for Cause, the Executive shall be entitled
to:
(a) the Executive's Base Salary at the rate in effect (as provided for
by Section 5.1 of this Agreement) at the time of such termination through
the Date of Termination;
(b) any Annual Bonus for the prior fiscal year not yet paid together
with a pro-rata portion of the Annual Bonus for the calendar year in which
termination occurs through the Date of Termination;
(c) any deferred compensation (including, without limitation, interest
or other credit on such deferred amounts) and any accrued vacation pay;
(d) reimbursement pursuant to Section 5.7 hereof or any other
provision of this Agreement for expenses incurred, but not yet paid prior
to such termination of employment; and
(e) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans and
programs of the Company and/or the Subsidiaries.
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In any case described in this Section 6.2, the Executive shall be given
written notice, authorized (with Executive abstaining) by a vote of at least two
thirds (2/3) of the members of the entire Board (excluding Executive), that the
Company intends to terminate the Executive's employment for Cause. Such written
notice, given in accordance with Section 6.6 of this Agreement, shall specify
the particular act or acts, or failure to act, which is or are the basis for the
decision to so terminate the Executive's employment for Cause. The Executive
shall be given the opportunity within ten (10) calendar days of the receipt of
such notice to meet with the Board to defend such act or acts, or failure to
act, and the Executive shall be given twenty (20) business days after such
meeting to correct such act, acts or failure(s) to act, provided that the
Executive shall not have the right to cure the acts described in Section 1.3(a)
hereof. Upon failure of the Executive, within such latter twenty (20) business
day period, to correct such act, acts or failure(s) to act, the Executive's
employment by the Company shall automatically be terminated under this Section
6.2 for Cause as of the date determined in Section 1.4 of this Agreement;
provided, however, if the act or acts, or the failure to act, which is or are
the basis for the decision to terminate the Executive's employment for Cause are
incapable of being cured within the twenty (20) business day period and the
Executive has commenced reasonable efforts to correct such act, acts or
failure(s) to act within the twenty (20) day period, then the Executive's
employment shall not be terminated under this Section 6.2 for Cause and the
Executive shall have a reasonable time period following the expiration of the
twenty (20) business day period to correct such act, acts or failure(s) to act.
6.3 Termination Without Cause or Termination with Good Reason. The
Company may terminate the Executive's employment hereunder without Cause and the
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Executive may terminate the Executive's employment hereunder for Good Reason. If
the Company terminates the Executive's employment hereunder without Cause, other
than due to death or Disability, or if the Executive terminates Executive's
employment for Good Reason, the Executive shall be entitled to the following:
(a) A lump sum payment in an amount equal to Executive's highest
annual Base Salary during the Term of Employment multiplied by 2.99 (two
hundred and ninety nine percent).
(b) Subject to the provisions of Section 6.3(a), a lump sum payment in
an amount equal to Executive's average annual bonus paid or payable to the
Executive with respect to the then immediately preceding three (3) fiscal
years (determined in accordance with Section 6.9 hereof) multiplied by 2.99
(299%). Notwithstanding the previous sentence, if the payments pursuant to
Sections 6.3(a), 6.3(b) and 6.3(c) together with any other payments
considered to be parachute payments within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended from time to time (the
"Internal Revenue Code"), or any successor provision shall cause the
Executive to incur an excise tax pursuant to Section 4999 of the Internal
Revenue Code (or any successor provision) or any similar tax, the payments
payable pursuant to Section 6.3(a), this Section 6.3(b) and Section 6.3(c)
shall be reduced to an amount which would not cause such excise or similar
tax to be incurred.
(c) any Base Salary accrued or Annual Bonus earned but not yet paid as
of the actual termination of this Agreement, and a pro rata Annual Bonus
for the calendar year in which such termination occurs.
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(d) any deferred compensation (including, without limitation, interest
or other credits on the deferred amounts) and any accrued vacation pay;
(e) reimbursement pursuant to Section 5.7 hereof or any other
provision of this Agreement for expenses incurred, but not paid prior to
such termination of employment;
(f) continuation of the pre-existing benefits of the Executive,
including, without limitation, health, welfare, life and any long-term
disability insurance heretofore provided or otherwise generally provided to
senior executives of the Company (including the Subsidiaries), all at the
level in effect (as provided for by Section 5.5 of this Agreement) on the
Date of Termination through the end of the three (3) year period following
such termination of employment (or the Company shall provide the economic
equivalent thereof); and
(g) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans or
programs of the Company and/or the Subsidiaries.
If the Executive seeks to terminate the Executive's employment
hereunder for Good Reason, the Company shall be given written notice that the
Executive intends to terminate the Executive's employment for Good Reason. Such
written notice, given in accordance with Section 6.6 of this Agreement, shall
specify the particular act or acts, or failure(s) to act, which is or are the
basis for the Executive's decision to so terminate the Executive's employment
for Good Reason. The Company shall be given the opportunity within ten (10)
calendar days of the receipt of such notice to meet with the Executive to defend
such act or acts, or failure(s) to act, and the
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Company shall be given twenty (20) business days after such meeting to correct
such act, acts or failure(s) to act provided that the Company shall not have the
right to correct the acts or failure(s) to act specified in clauses (c), (i) and
(k) of the definition of Good Reason. Upon failure of the Company, within such
latter twenty (20) business day period, to correct such act, acts or failure(s)
to act, the Executive's employment by the Company shall automatically be
terminated under this Section 6.3 for Good Reason as of the date of actual
termination provided that the date of actual termination shall be ten (10)
calendar days after receipt of the Executive's notice if the Company does not
have the right to correct such act(s) or failure(s) to act.
6.4 Intentionally omitted.
6.5 No Mitigation; No Offset. In the event of any termination of
employment under this Section 6, the Executive shall be under no obligation to
seek other employment and there shall be no offset against any amounts paid or
payable the Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may obtain. Any
amounts due under this Section 6 are in the nature of severance payments, or
liquidated damages, or both, and are not in the nature of a penalty.
6.6 Notice of Termination. Any termination of the Executive by the
Company or by the Executive for Good Reason shall be communicated by a notice of
termination to the other party hereto given in accordance with Section 15.3 of
this Agreement (the "Notice of Termination"). Such notice shall (a) indicate the
specific termination provision in this Agreement relied upon, (b) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(c) if the termination date is other than the date of receipt of such notice,
specify the date on
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which the Executive's employment is to be terminated (which date shall not be
earlier than the date on which such notice is given).
6.7 Payment. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled under this Section 6,
including, without limitation, any economic equivalent of any benefit, shall be
made as promptly as possible following the Date of Termination. If the amount of
any payment due to the Executive cannot be finally determined within ninety (90)
days after the Date of Termination (by way of example only, pro rata bonuses
determined pursuant to Section 6.10 hereof), such amount shall be estimated on a
good faith basis by the Company and the estimated amount shall be paid no later
than ninety (90) days after such Date of Termination. As soon as practicable
thereafter, the final determination of the amount due shall be made and any
adjustment requiring a payment to or from the Executive shall be made as
promptly as practicable.
6.8 Disclosure of Termination. Subject to the requirements of any
Exchange on which securities of the Company may be listed or the securities
laws, and except for terminations for Cause or the death or Disability of the
Executive, any public disclosure of the termination of this Agreement by the
Company shall be subject to prior review and approval by the Executive, which
review and approval shall not be unreasonably withheld or delayed.
6.9 Pro Rata Calculations. For the purposes of this Article 6 (except
Section 6.2(b)), all calculations of the Annual Bonus on a pro rata basis shall
mean that the Annual Bonus shall be based on the bonus that would have been
payable for the entire calendar year multiplied by a fraction, the numerator of
which is the number of days from January 1 in such year through the date of the
termination of this Agreement and the denominator of which is 365.
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7. Key Man Life Insurance. If requested by the Company, Executive will
cooperate with the Company, at the Company's expense, to obtain key man life
insurance on the Executive's life.
8. Non-exclusivity of Rights. Except as provided in Section 5.4 hereof,
nothing in this Agreement or any other provision of this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided or maintained by the Company,
the Subsidiaries or any other Affiliate and for which the Executive may qualify,
nor shall anything herein limit or otherwise prejudice such rights as the
Executive may have under any other existing or future agreements with the
Company, the Subsidiaries or any Affiliate, including, without limitation, any
change of control agreements or any stock option or restricted stock agreements.
Except as otherwise expressly provided for in this Agreement, amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plans or programs of the Company, the Subsidiaries or any other Affiliate at
or subsequent to the Date of Termination shall be payable in accordance with
such plans or programs.
9. Full Performance. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
10. Fees and Expenses. In the event that a claim for payment or
benefits under this Agreement is disputed, the Company shall advance and pay all
reasonable accounting and legal fees and expenses of the Executive, at the
regular hourly rate charged by the accountants and
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attorneys of the Executive in connection with any such dispute (whether such
dispute is litigated or arbitrated including, without limitation, in connection
with claims that are settled) incurred by the Executive in pursuing or defending
such claim. The Executive shall not have an obligation to repay any such
advances to the Company except to the extent that a court of competent
jurisdiction issues a final, nonappealable judgment ordering the Executive to
reimburse the Company for a portion (or, if so ordered, all) of legal fees and
expenses previously advanced by the Company, based upon such court's
determination of what is reasonable under all applicable facts and circumstances
including which party prevailed on each of the issues disputed. The Company
shall in addition pay or reimburse the Executive for all reasonable legal fees
and expenses incurred by the Executive in connection with the preparation and
negotiation of this Agreement and the matters related thereto.
11. Confidential Information. The Executive shall not, during the Term
of Employment and thereafter, without the prior express written consent of the
Company, disclose any confidential information, knowledge or data relating to
the Company, which (a) was obtained by the Executive in the course of the
Executive's employment with the Company, and (b) which is not information,
knowledge or data otherwise in the public domain (other than by reason of a
breach of this provision by the Executive), unless required to do so by a court
of law or equity or by a governmental agency or other authority.
12. Successors.
12.1 The Executive. This Agreement is personal to the Executive and,
without the prior express written consent of the Company, shall not be
assignable by the Executive, except that the Executive's rights to receive any
compensation or benefits under this Agreement
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may be transferred or disposed of pursuant to testamentary disposition,
intestate succession or a qualified domestic relations order or in connection
with a Disability. This Agreement shall inure to the benefit of and be
enforceable by the Executive's estate, heirs, beneficiaries and/or legal
representatives.
12.2 The Company. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company shall
require any successor to all or substantially all of the business and/or assets
of the Company or the Subsidiaries, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, by an agreement in
form and substance satisfactory to the Executive, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent as the
Company would be required to perform had no such succession taken place.
13. Indemnification.
13.1 General. The Company agrees that if the Executive is made a party
or is threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that Executive is or was a director or officer of the Company, the
Subsidiaries and/or any other Affiliate or is or was serving at the request of
the Company, the Subsidiaries and/or any other Affiliate as a director, officer,
member, employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including, without limitation, service with
respect to employee benefit plans, whether or not the basis of such Proceeding
is alleged action in an official capacity as a director, officer, member,
employee or agent while serving as a director, officer, member, employee or
agent, Executive shall be indemnified and held harmless by the Company to the
fullest extent
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authorized by New York law, as the same exists or may hereafter be amended,
against all Expenses (as hereinafter defined in Section 13.2) incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if the Executive has ceased to be an
officer, director or agent, or is no longer employed by the Company and shall
inure to the benefit of Executive's heirs, executors and administrators.
13.2 Expenses. As used in this Article, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements and costs, reasonable attorneys' fees,
reasonable accountants' fees, and disbursements and costs of attachment or
similar bonds, investigations, and any reasonable expenses of establishing a
right to indemnification under this Agreement.
13.3 Enforcement. If a claim or request under this Article is not paid
by the Company fifteen (15) days after a written claim or request has been
received by the Company, the Executive may at any time thereafter commence
arbitration against the Company to recover the unpaid amount of the claim or
request and if successful in whole or in part, the Executive shall be entitled
to be paid also the expenses of prosecuting such suit. The burden of proving
that the Executive is not entitled to indemnification for any reason shall be
upon the Company.
13.4 Subrogation. In the event of payment under this Article, the
Company shall be subrogated to the extent of such payment to all the rights of
recovery of the Executive.
13.5 Partial Indemnification. If the Executive is entitled under any
provision of this Article to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the portion of such
Expenses to which the Executive is entitled.
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13.6 Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, provided that prior
to such advance the Executive shall provide the Company with a written
undertaking to repay such advances to the Company if it shall ultimately be
determined that he is not entitled to be indemnified as authorized under the
California General Corporation Law.
13.7 Notice of Claim. The Executive shall give to the Company notice of
any claim made against the Executive for which indemnity will or could be sought
under this Article. In addition, the Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
the Executive's power and at such times and places as are convenient for the
Executive.
13.8 Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof:
13.8.1 The Company will be entitled to participate therein at its own
expense; and
13.8.2 Except as otherwise provided below, to the extent that it may
wish, the Company jointly with any other indemnifying party similarly notified
will be entitled to assume the defense of the Executive, with counsel
satisfactory to the Executive. The Executive also shall have the right to employ
the Executive's own counsel in such action, suit or Proceeding and the
reasonable fees and expenses of such counsel shall be at the expense of the
Company. The Company shall not be entitled to assume the defense of any action,
suit or Proceeding brought by or on behalf of the Company or the Subsidiaries or
as to which the Executive shall
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have concluded that there may be a conflict of interest between the Company or
the Subsidiaries and the Executive in the conduct of the defense of such action.
13.8.3 The Company shall not be liable to indemnify the Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on the
Executive without Executive's written consent. Neither the Company nor the
Executive will unreasonably withhold or delay their consent to any proposed
settlement.
13.9 Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 13 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute, provision of the
certificate of incorporation or by-laws of the Company or the Subsidiaries,
agreement, vote of stockholders or disinterested directors or otherwise.
13.10 Directors and Officers Liability Policy. The Company agrees to
use commercially reasonable efforts to obtain a directors and officers liability
insurance policy covering the Executive in an amount and in accordance with
terms no less favorable than that policy in effect upon the Commencement Date.
The Company shall use its commercially reasonable efforts to maintain during the
Term of Employment (and for so long thereafter as is practicable in the
circumstances taking account of prevailing conditions as to availability of such
insurance) coverage to the Executive in an amount at least equal to that
maintained immediately prior to the Commencement Date.
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14. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any portion thereof, shall be resolved by binding
arbitration. The arbitration shall be conducted in Los Angeles County,
California in accordance with the arbitration rules promulgated and adopted by
the American Arbitration Association, JAMS/Endispute or other reputable
recognized alternative dispute resolution organization (hereinafter collectively
referred to as "ADR") chosen by the party demanding arbitration. Any party may
commence arbitration by sending a written demand for arbitration to the other
party and filing such claim with the ADR and paying the appropriate filing fees.
The demand will state the dispute with reasonable particularity. Subject to the
availability of the neutral arbitrator, the arbitration hearing shall be
commenced within the sixty (60) days following the date of appointment of the
neutral arbitrator. Unless the parties mutually agree on one arbitrator, the
arbitration shall be conducted by a panel of three (3) qualified arbitrators,
one (1) chosen by the Company, one (1) by the Executive and one (1) chosen by
the first two (2) arbitrators so appointed. If either party fails to designate
an arbitrator within ten (10) days of receipt of the demand for arbitration,
then it shall be deemed that the parties have agreed to have a single
arbitrator. The neutral arbitrator shall be chosen within twenty (20) days of
receipt of the demand for arbitration. If the parties or their respective
arbitrators fail to agree upon a neutral arbitrator, then either party may apply
to the Superior Court of Los Angeles County for an order appointing the neutral
arbitrator. Each party shall retain the right to cross-examine the opposing
party's witnesses. Discovery shall be limited to one (1) deposition per side and
one (1) demand for production and inspection of documents.. The majority
decision of the arbitration panel shall be final, binding and conclusive on all
parties (without any right of appeal therefrom) and shall not be subject to
judicial review, other than as
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provided by law. The fees for the neutral arbitrator and administration of the
arbitration shall be divided between the parties. As part of its decision, the
arbitration panel may allocate the cost of arbitration, including fees of
attorneys and experts, as it deems fair and equitable in light of all relevant
circumstances. The parties waive the right to a trial by jury. The award of the
arbitrator shall be in writing and shall set forth the basis upon which all
issues submitted by the parties for decision has been decided. Judgment on the
award rendered by the arbitration panel may be entered in any court of competent
jurisdiction.
15. Miscellaneous.
15.1 Applicable Law. Except as may be otherwise provided herein, this
Agreement shall be governed by and construed in accordance with the laws of the
State of California, applied without reference to principles of conflict of
laws.
15.2 Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
15.3 Notices. All notices and other communications hereunder shall be
in writing and shall be given by hand-delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: Xxxxx Xxxxx
Lola, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
and to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxxx Xxxxxxxxx Xxxxx & Leeds, LLP
0000 Xxxxxxxx Xxxx.
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
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If to the Company: Aris Industries, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman
with a copy to: Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
15.4 Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state and local income, unemployment, social
security and similar employment related taxes and similar employment related
withholdings as shall be required to be withheld pursuant to any applicable law
or regulation.
15.5 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and any such provision which is not valid or
enforceable in whole shall be enforced to the maximum extent permitted by law.
15.6 Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
15.7 Beneficiaries/References. The Executive shall be entitled to
select (and change) a beneficiary or beneficiaries to receive any compensation
or benefit payable hereunder following the Executive's death, and may change
such election, in either case by giving the Company written notice thereof. In
the event of the Executive's death or a judicial determination
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of the Executive's incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to the Executive's
beneficiary(ies), estate or other legal representative(s).
15.8 Entire Agreement. This Agreement contains the entire agreement
among the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.
15.9 Representation. Each party to this Agreement represents and
warrants that it is fully authorized and empowered to enter into this Agreement
and that the performance of its obligations under this Agreement will not
violate any agreement between it and any other person, firm or organization or
any applicable laws or regulations.
15.10 Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement or the
Executive's employment hereunder to the extent necessary to the intended
preservation of such rights and obligations.
15.11 Joint and Several Obligations. Anything to the contrary
notwithstanding in this Agreement, all of the monetary and non-monetary
obligations of the Company in this Agreement shall be and are the joint and
several obligations of the Company and the Subsidiaries.
15.12 Joint Efforts/Counterparts. Preparation of this Agreement shall
be deemed to be joint effort of the parties hereto and shall not be construed
more severely against any party. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Attest: ARIS INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Asst. Secretary Name: Xxxxxx Xxxxx
---------------------------
Title: Chairman of the Board
---------------------------
Attest: EUROPE CRAFT IMPORTS, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/Xxxxxx Xxxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Asst. Secretary Name: Xxxxxx Xxxxx
---------------------------
Title: Chairman of the Board
---------------------------
Attest: XOXO, Inc. (Formerly known XOXO
ACQUISITION CORP.)
/s/ Xxxxxx X. Xxxxxx By: /s/Xxxxxx Xxxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Asst. Secretary Name: Xxxxxx Xxxxx
---------------------------
Title: Chairman of the Board
---------------------------
Attest: ECI SPORTSWEAR, INC.
/s/ Xxxxxx X. Xxxxxx By: /s/Xxxxxx Xxxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx, Asst. Secretary Name: Xxxxxx Xxxxx
---------------------------
Title: Chairman of the Board
---------------------------
XXXXX XXXXX
/s/ Xxxxx Xxxxx
---------------------------------
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SCHEDULE 5.8
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PERQUISITES AND FRINGE BENEFITS
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o Use of Mercedes-Benz or automobile of similar status and driver selected by
the Executive
o Four (4) weeks of paid vacation for each calendar year, to be taken
cumulatively
o While in New York, the use of a luxury automobile and a driver of Xx.
Xxxxx'x choice
o Reimbursement by the Company for all business-related expenses, including
but not limited to, telephone (both land and cellular) charges,
entertainment and first class travel and hotel accommodations.
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