-15-
BAODOCS1/0023381.01
Management Agreement
This Management Agreement (the Agreement) is
entered into on the 30th day of June, 1995, between Merry-Go-
Round Enterprises, Inc., a Maryland corporation (the
Company), and Meridian Ventures, Inc., a South Carolina
corporation (Meridian).
Recitals
A. The Company filed a petition under Chapter 11
of the Bankruptcy Code in the Bankruptcy Court for the
District of Maryland, Baltimore Division (the Bankruptcy
Court) on January 11, 1994 (the Chapter 11 case of the
Company, Case No. 94-5-0161-SD, is referred to as the
Bankruptcy Case).
B. The Company and Meridian entered into a
certain Management Agreement dated January 6, 1995 (the
Prior Agreement) pursuant to which Meridian has
satisfactorily performed certain management and other
services to and on behalf of the Company.
C. The Prior Agreement expires pursuant to its
terms on June 30, 1995.
D. Meridian and the Company have agreed to
certain terms and conditions upon which Meridian shall
perform management services to and on behalf of the Company
after June 30, 1995, which terms and conditions are as set
forth in this Agreement.
Agreement
Now, therefore, in consideration of the foregoing
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. Retention. The Company hereby retains
Meridian, and Meridian hereby agrees to perform services for
the Company, upon the terms and subject to the conditions
set forth in this Agreement.
2. Term. The term of this Agreement shall
commence on July 1, 1995 and shall terminate on July 31,
1995, unless earlier terminated pursuant to paragraph 7 or
8(n); provided that the Company may extend the term of this
Agreement through and until August 31, 1995 by providing
written notice of such extension to Meridian on or before
July 20, 1995. In the event the Company exercises its right
to extend the term of this Agreement, the term shall be
extended through and until August 31, 1995, upon the same
terms and conditions as set forth herein, which extension
shall be effective as of the then current expiration date of
this Agreement.
3. Services.
(a) Scope of Services. Subject to the
provisions of paragraph 3(h), Meridian shall perform, or
shall cause to be performed, the management of all aspects
of the Company's operations, including, but not limited to
the administration of the Company with respect to matters
relating to the Bankruptcy Case, real estate operations and
leasing, legal and personnel administration and Company
operations. Meridian shall use its best efforts to
finalize and obtain a replacement debtor-in-possession
financing facility for the Company on the terms provided in
that certain Commitment Letter form GE Capital Corporation
and Citibank USA (the Lenders) dated June 9, 1995 (the
Replacement DIP Facility). In addition, Meridian shall
cooperate with the Company, the Board and the Lenders, and
take such actions as are necessary, to ensure a smooth and
orderly transition with the permanent CEO and President of
the Company. Meridian shall perform all of its obligations
and services hereunder in a manner consistent with the
policies adopted by the Board and consistent with Chapter 11
of the United States Bankruptcy Code, based upon the advice
of qualified bankruptcy counsel of the Company.
(b) Xxxxx and Xxxxxx. Subject to the
provisions of paragraph 3(h), Meridian shall furnish, and
the Company shall accept, the services of (i) Xxxxxx X.
Xxxxx (Xxxxx), who shall serve as the Company's Chairman and
Chief Executive Officer, and (ii) Xxxxx X. Xxxxxx (Xxxxxx),
who shall serve as the Company's President and Chief
Operating Officer. Xxxxx and Xxxxxx shall perform the
services required of Meridian under this Agreement and may
utilize the services of such other Meridian personnel from
time to time, as Meridian deems appropriate. Subject to the
provisions of paragraph 3(h), Xxxxx and Xxxxxx shall serve
as full-time officers of the Company, devote substantially
all of their business time, energy and abilities to the
business, affairs and interest of the Company and its
affiliates and perform their services and the services of
Meridian contemplated by this Agreement and such other
duties and services customarily performed by officers
serving in the positions held by Xxxxx and Xxxxxx in
accordance with policies established by the Board and in a
manner consistent with Chapter 11 of the Bankruptcy Code.
Notwithstanding the foregoing, the parties acknowledge and
agree that each of Xxxxx and Xxxxxx shall be permitted to
continue as principals of Meridian; provided that neither
Xxxxx nor Xxxxxx shall lead or act as the principal or
material consultant in any other assignment or pursuant to
any other agreement to which they or Meridian are a party
during the term hereof.
(c) Board Representation. Xxxxx shall be a
member of the Board and shall be nominated for reelection to
the Board, when appropriate, during the term of this
Agreement. Xxxxxx may attend meetings of the Board, but
will not be a member of the Board nor be entitled to vote on
matters presented to the Board.
(d) Duties of Xxxxx and Xxxxxx. Xxxxx,
Xxxxxx and any other employees, representatives, agents or
consultants of Meridian performing services for or on behalf
of the Company, agree to observe and comply with the
policies of the Company as adopted by the Board with respect
to the performance of Meridian's duties and the duties
delegated to Xxxxx and Xxxxxx, and agree to carry out and
perform such orders, directions and policies of the Company
and the Board as may be stated either orally or in writing
from time to time.
(e) Employment Decisions. Xxxxx and Xxxxxx
shall have the ability to hire new employees on behalf of
the Company, provided that neither Xxxxx nor Xxxxxx may hire
any new employee on behalf of the Company for a position
providing an annual aggregate of salary and benefits in
excess of $150,000 without obtaining the prior written
approval of the Board. No employment contracts shall be
entered into and no benefits exceeding tier 2 benefits (as
defined in Retention Incentive and Severance Plan approved
by the Bankruptcy Court by Order entered October 25, 1994)
shall be granted, except upon approval of the Board, the
Official Committees in the Bankruptcy Case (the Committees),
Fidelity Research and Management Company (Fidelity) and Bear
Xxxxxxx & Co., Inc. (Bear Xxxxxxx). Xxxxx and Xxxxxx shall
have the ability to fire employees of the Company without
obtaining the prior approval of the Board with respect to
all positions within the Company, except for the Executive
Vice President and Chief Financial Officer of the Company
and the Presidents of each division of the Company. In
addition, neither Xxxxx nor Xxxxxx may cause the Company to
hire employees or affiliates of Meridian, or hire, retain or
terminate professionals of or on behalf of the Company,
without obtaining the prior written approval of the Board.
(f) Other Meridian Personnel. Meridian, at
its option, may furnish the services of other Meridian
personnel or affiliates as Meridian may from time to time
deem necessary or appropriate to perform Meridian's
obligations hereunder and such personnel or affiliates shall
have the duties assigned to them by Meridian, consistent
with the policies of the Company as adopted by the Board and
with Chapter 11 of the Bankruptcy Code; provided that no
additional fees shall be paid to such personnel or
affiliates for such services without the prior written
approval of the Board.
(g) Employees of Meridian; No Benefits. The
parties acknowledge and agree that: (i) by furnishing the
services of Xxxxx and Xxxxxx and other Meridian personnel to
the Company, Meridian is functioning as an independent
contractor to the Company; (ii) Xxxxx, Xxxxxx and other
personnel provided by Meridian shall remain employees of
Meridian, and Meridian retains the right (subject to the
terms hereof) to direct and control the performance of all
Meridian employees, including Xxxxx and Xxxxxx, consistent
with the policies of the Company; (iii) Meridian is solely
responsible for the payment of salary, employee benefits and
all other compensation due to Meridian personnel rendering
services to the Company, including Xxxxx and Xxxxxx, and for
all applicable federal, state and local tax withholding with
respect to compensation and benefits payable to them under
this Agreement or otherwise; (iv) the
compensation to Meridian set forth in paragraph 4 shall be
exclusive and Meridian personnel, including Xxxxx and
Xxxxxx, shall not participate in or be eligible to
participate in any compensation or benefit plan or
perquisite of the Company; and (v) all amounts of cash which
may be paid to Xxxxx, Xxxxxx or any other Meridian personnel
pursuant to this Agreement shall be paid to and received by
such persons solely as nominees for and on behalf of
Meridian and not on their own account.
(h) New CEO. Notwithstanding any other
provision of this Agreement to the contrary, Meridian
acknowledges and agrees that the Company and the Board are
actively seeking to retain a new CEO and President of the
Company (the New CEO) to replace Meridian, Xxxxx and
Xxxxxx. Upon the retention of the New CEO, Xxxxx shall no
longer be CEO of the Company and Xxxxxx shall no longer be
President and Chief Operating Officer of the Company.
Meridian agrees that neither the retention by the Company of
the New CEO nor the diminution or change in the level and
nature of services to be provided by Meridian, Xxxxx and
Xxxxxx hereunder shall constitute an event permitting
Meridian to terminate this Agreement. Meridian agrees to
use its best efforts to ensure a smooth transition of
management to the New CEO.
4. Fees. In consideration of the services to be
performed hereunder and for providing the services of Shull,
Kenney, and other Meridian personnel, Meridian shall receive
the fees set forth in this paragraph 4; provided, that if
this Agreement is terminated pursuant to paragraph 7 or
paragraph 8(n) of this Agreement, such compensation shall be
adjusted or forfeited as provided in paragraph 7 or
paragraph 8(n), as applicable. The amounts payable pursuant
to this paragraph 4 shall constitute the exclusive
compensation payable to Meridian for its services provided
under this Agreement and for the services provided by Xxxxx,
Xxxxxx and all other Meridian personnel hereunder, and no
other compensation or consideration shall be payable to
Meridian or any other individual provided by Meridian in
connection with the services provided hereunder, except as
otherwise expressly provided in this Agreement.
(a) Monthly Management Fee.
(i) During the term of this Agreement,
the Company shall pay Meridian a
monthly management fee of $95,000
per month.
(ii) The Management Fees shall be
payable monthly in arrears on the
first day of each month commencing
on the first day of the first month
following the commencement of the
term of this Agreement.
(b) Bonus Fee. In addition to Management
Fees but in lieu of any Bonus Fee payable under the Prior
Agreement, the Company shall pay to Meridian bonus
compensation (the Bonus Fee) in an amount in cash equal to:
(i) $75,000 upon the
closing of the Replacement DIP Facility, such that the
Lenders are prepared to make advances to or for the benefit
of the Company thereunder, so long as such closing occurs
during the Term of this Agreement as such term may be
extended pursuant to paragraph 2, and (ii) an additional
amount equal to $50,000 on the effective date of a Chapter
11 plan of reorganization for the Company confirmed pursuant
to Section 1129 of the Bankruptcy Code (a Plan).
5. Expense Reimbursement. Xxxxx and Xxxxxx
shall be entitled to be reimbursed by the Company from time
to time (but not more frequently than monthly) for
reasonable out-of-pocket business expenses incurred by Xxxxx
and Xxxxxx, including expenses in connection with bona fide
business travel on behalf of the Company, upon presentation
from time to time of an itemized written account of such
expenses. Notwithstanding the foregoing, neither Meridian,
Xxxxx, Xxxxxx nor any other Meridian personnel shall be
entitled to be compensated or reimbursed for any out-of-
pocket or other expenses not related to the business and
services performed hereunder, including but not limited to
commuter travel and lodging expenses.
6. D&O Liability Coverage; Indemnification;
Release.
(a) D&O Insurance. Xxxxx and Xxxxxx, in
their respective official capacities on behalf of the
Company, shall be covered by the Company's Director and
Officer Liability Insurance Policy, to the same extent as
other officers and directors of the Company. Such coverage
shall continue for Xxxxx and Xxxxxx following the expiration
or earlier termination of this Agreement (other than as a
result of a termination pursuant to paragraph 7(a)) for the
same duration as such coverage is available to other
officers and directors of the Company.
(b) Indemnification.
(i) Indemnified Parties. Except
as otherwise expressly provided in
this Agreement, the Company agrees
to indemnify and hold Meridian,
Xxxxx and Xxxxxx (collectively, the
Indemnified Parties) harmless from
and against any and all actions,
claims, damages and liabilities,
including the costs of
investigating, preparing or
defending any such action or claim,
whether or not in connection with
litigation in which an Indemnified
Party is a party, caused by,
relating to, based upon or arising
out of such Indemnified Party's
acceptance of or the performance or
non-performance of its obligations
under this Agreement; provided,
however, that such indemnity and
hold harmless obligation shall not
apply to any such action, claim,
damage, liability or
cost to the extent arising out of
or attributable to the gross
negligence, willful misconduct or
fraud of, or breach of this
Agreement by, an Indemnified Party.
(ii) Indemnification Demand. If
any action, proceeding or
investigation is commenced for
which an Indemnified Party proposes
to demand such indemnification, it
will notify the Company with
reasonable promptness; provided,
however, that any failure by an
Indemnified Party to notify the
Company will not relieve the
Company from its obligations
hereunder, except to the extent
that such failure shall have
prejudiced the defense of any such
action, proceeding or
investigation. The Company shall
promptly pay expenses reasonably
and actually incurred by an
Indemnified Party in defending or
settling any action, proceeding or
investigation in which an
Indemnified Party is a party or is
threatened to be made a party by
reason of its relationship with the
Company hereunder, upon submission
of invoices therefor. The
Indemnified Parties shall repay any
and all such amounts so advanced if
it shall be determined that such
Indemnified Party is not entitled
to be indemnified therefor. If any
such action, proceeding, or
investigation in which an
Indemnified Party is a party is
also against the Company or any of
its affiliates, the Company may, in
lieu of advancing the expenses of
separate counsel for such
Indemnified Party, provide such
Indemnified Party with legal
representation by the same counsel
who represents the Company or its
affiliates, as applicable, at no
cost to such Indemnified Party;
provided, however, that if such
counsel or counsel to such
Indemnified Party shall determine
that due to the existence of actual
or potential conflicts of interest
between such Indemnified Party and
any one or more of the Company or
its affiliates, such counsel is
unable to represent both the
Indemnified Party and one or more
of the Company or its affiliates,
then the Indemnified Party shall be
entitled to use separate counsel of
its own choice, and the Company
shall promptly pay the Indemnified
Party's reasonable
expenses of such separate counsel
upon submission of invoices
therefor. Nothing herein shall
prevent any Indemnified Party from
using separate counsel of its own
choice at its own expense. The
Company shall only be liable for
settlements of claims against any
Indemnified Party made with the
Company's written consent, which
consent shall not be unreasonably
withheld.
(iii) Contribution If
Indemnification Provisions Not
Enforced. In order to provide for
just and equitable contribution if
a claim for indemnification
pursuant to these indemnification
provisions is made but it is found
by a court of competent
jurisdiction that such
indemnification may not be enforced
in such case, even though the
express provisions hereof would
require indemnification, then the
Company, on the one hand, and the
applicable Indemnified Party, on
the other hand, shall contribute to
the amount paid or payable as a
result of the losses, claims,
damages, liabilities and costs in
such proportion as is appropriate
to reflect the relative fault of
the Company and Indemnified Party
in connection with the acts or
omissions which resulted in such
losses, claims, damages,
liabilities and costs, as well as
any other relevant equitable
considerations. The amount paid or
payable by a party as a result of
the losses, claims, damages and
liabilities and expenses referred
to above shall be deemed to
include, subject to the limitations
set forth in paragraph 6(b)(ii)
above, any legal or other fees or
expenses reasonably incurred by
such party in connection with any
investigation or proceeding.
(iv) Indemnification Remains in Effect.
Neither the termination of this
Agreement nor completion of the
retention of Meridian, Xxxxx and
Xxxxxx hereunder shall affect these
indemnification provisions, which
shall hereafter remain operative
and in full force and effect for a
period expiring two (2) years after
such termination or completion.
(v) Indemnification Under Agreement Not
Exclusive; Limitation. The rights
provided in this paragraph
6(b) shall not be deemed exclusive
of any other rights to which the
Indemnified Parties may be entitled
under the articles of incorporation
and bylaws of the Company, any
other agreements, any vote of
stockholders or disinterested
directors of the Company, any
applicable law or otherwise, but
shall nevertheless in all respects
be limited to the maximum extent
permitted by applicable law.
(c) Releases Under Plan. The Company shall
use its best efforts to include a provision in a Plan
providing for a release of liability for Meridian, Xxxxx and
Xxxxxx upon the same terms and conditions as provided for
professionals and for former officers and directors of the
Company.
7. Termination. This Agreement may be
terminated prior to the expiration of the term of this
Agreement only as provided in this paragraph 7 or paragraph
8(n).
(a) Termination by the Company for Cause. The Company
shall have the right to terminate this Agreement for cause
at any time prior to July 31, 1995 (as such date may be
extended pursuant to paragraph 2) by giving written notice
to Meridian. The Company shall have "cause" if, prior to
such termination, the Board makes a determination in good
faith of: (i) Xxxxx'x or Xxxxxx'x personal dishonesty,
gross negligence, willful misconduct, habitual abuse of
alcoholic beverages or other substance abuse, breach of
fiduciary duty or intentional failure to perform stated or
assigned duties, or upon Xxxxx'x or Xxxxxx'x conviction of
any offense punishable by imprisonment of one year or more,
(ii) Meridian's gross negligence, willful misconduct, breach
of fiduciary duty or intentional failure to perform its
obligations hereunder, (iii) Xxxxx, Xxxxxx or Meridian
(collectively, the Meridian Parties) commits any act of
fraud or dishonesty in connection with the services rendered
hereunder, (iv) any of the Meridian Parties commits a
material breach of any of their respective obligations
hereunder or under any other agreement between the Meridian
Parties, or any of them, and the Company, and shall fail to
remedy such breach within ten (10) days after having
received written notice from the Company, or (v) Xxxxx and
Xxxxxx die or become "permanently disabled" (as hereafter
defined). If this Agreement is terminated by the Company
for cause under this paragraph 7(a), the Meridian Parties
shall not be entitled to receive any further compensation
under this Agreement, including, but not limited to,
Management Fees (other than Management Fees accrued, but
unpaid as of the date of termination, with respect to the
period prior to termination), and any Bonus Fee payable
pursuant to and in accordance with paragraph 4(b), and the
Company shall be entitled to pursue such remedies against
Meridian, Xxxxx and Xxxxxx as may be available at law, in
equity or otherwise. For purposes of this Agreement, a
person shall be deemed to be "permanently disabled" if any
ailment, illness or other physical or mental incapacity
prevents such person from performing its duties as specified
in this Agreement for a period of 17 consecutive business
days during the term of this Agreement, or if such
disability meets the criteria of "permanent and total
disability" within the meaning of Section 22(e)(3) of the
Internal Revenue Code.
(b) Termination by Meridian for Cause;
Expiration of Term Without Renewal.
(i) Meridian shall have the right to
terminate this Agreement for cause
at any time prior to July 31, 1995
(as such date may be extended
pursuant to paragraph 2) by giving
10 days prior written notice to the
Company. Meridian shall have
"cause" if (aa) the Company commits
a material breach of any of its
obligations hereunder or under any
other agreement between Meridian
and the Company and shall fail to
remedy such breach within 10 days
after having received written
notice thereof from Meridian;
(bb) at any time prior to the
appointment of the New CEO, the
Company, without the prior written
consent of Meridian, materially
diminishes the titles and
responsibilities initially given
Xxxxx or Xxxxxx hereunder or
materially diminishes the duties of
Xxxxx or Xxxxxx to a level where
either's duties are substantially
dissimilar to the duties performed
by persons employed in similar
positions with other retail
companies of comparable size, or
(cc) the Board establishes
limitations, instructions,
directions or controls applicable
to either Xxxxx'x or Xxxxxx'x
performance of their respective
duties hereunder which are
materially inconsistent with the
bylaws of the Company, or at any
time prior to the appointment of
the New CEO, are not (except as
warranted by the Company's
circumstances) customary for the
offices held by Xxxxx or Xxxxxx, as
the case may be. Notwithstanding
the foregoing, the retention by the
Company of a New CEO as
contemplated under paragraph 3(h),
and any resulting diminution in the
position, duties and
responsibilities of Meridian, Xxxxx
or Xxxxxx, shall not constitute an
event permitting Meridian to
terminate this Agreement.
(ii) In the event that this Agreement is
terminated by Meridian pursuant to
paragraph 7(b)(i), the Company
shall continue to pay Meridian the
Management Fees through and until
July 31, 1995 (as such date may be
extended pursuant to paragraph 2)
on a monthly basis, as if this
Agreement had not been terminated.
In addition, in the event that this
Agreement is terminated by Meridian
for cause, then notwithstanding
such termination, Meridian shall be
entitled to receive any Bonus Fee
payable pursuant to paragraph 4(b)
in the manner provided in such
paragraph, but no other amounts
shall be due and payable hereunder
by the Company (other than
Management Fees accrued, but unpaid
as of the date of termination, with
respect to the period prior to
termination).
8. General.
(a) Bankruptcy Court Approval. The
effectiveness of this Agreement shall be conditioned upon
the entry of an order of the Bankruptcy Court approving this
Agreement with respect to which no appeal has been taken, or
if an appeal has been taken, no stay pending such appeal has
been obtained (Bankruptcy Court Approval).
(b) Amendment. No modification or amendment
of, or waiver under, this Agreement shall be valid unless in
writing and signed by each of the parties hereto, and
approved by the Committees, Fidelity and Bear Xxxxxxx.
(c) Binding Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.
(d) Authorization. Subject to Bankruptcy
Court approval, the Company and Meridian each represent and
warrant that this execution, delivery and performance of
this Agreement has been duly authorized by all necessary
corporate action.
(e) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Maryland.
(f) Severability. If any term, provision,
covenant or restriction herein is held by a court of
competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
(g) Notices. All notices, requests, demands
and other communications hereunder shall be in writing and
shall be deemed to have been duly given (i) when delivered
personally or sent by overnight courier express service or
(ii) three days after having been deposited in the United
States mail, registered or certified, return receipt
requested, postage prepaid, addressed as follows:
If to Meridian, to:
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Meridian Ventures, Inc.
0 Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
FAX: 000-000-0000
PHONE: 000-000-0000
with a copy to:
Xxxx Xxxx Xxxxxx, Esquire
Xxxxxx & Xxxxx
000 00xx Xxxxxx, X.X., 00xx Xxxxx
Xxxxxxxxxx, X.X. 00000
FAX: (000) 000-0000
PHONE: (000) 000-0000
- and -
Xxxxxx Xxxxxxx, Esquire
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FAX: (000) 000-0000
PHONE: (000) 000-0000
If to the Company, to:
Merry-Go-Round Enterprises, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
FAX: 000-000-0000
PHONE: 000-000-0000
with a copy to:
Xxxxx Xxxxxxx, Esquire
Xxxxxxx X. Xxxxx, Esquire
Xxxxxxx & Berlin, Chartered
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
FAX: 000-000-0000
PHONE: 000-000-0000
and with copies to the Committees, Fidelity and Bear Xxxxxxx
at such address as each shall designate by giving notice
hereunder to Meridian and the Company or to such other
address or addresses as each of the parties hereto may
communicate in writing to the other. Written notice given
by any other method shall be deemed effective only when
actually received by the party to whom given.
(h) Attorneys' Fees. In the event that any
party to this Agreement shall default in the performance of
any of its obligations hereunder, in addition to any and all
other rights or remedies which the non-defaulting party may
have against the defaulting party, the defaulting party
shall be liable to the non-defaulting party for all court
costs and attorneys' fees incurred by the non-defaulting
party in enforcing its rights hereunder.
(i) Tax Indemnification. Meridian, Xxxxx
and Xxxxxx agree jointly and severally to indemnify and hold
the Company harmless against, and to reimburse the Company
on demand for any federal, state or local taxes, workers
compensation, health or disability benefits, and any
penalties and interest thereon to the extent not otherwise
paid by Meridian, and required to be paid and paid by or on
behalf of the Company in respect of the services of
Meridian, Xxxxx, Xxxxxx or any of the other Meridian
personnel whose services are furnished to the Company
pursuant to this Agreement.
(j) Entire Agreement. This Agreement
contains the entire understanding of the parties hereto
respecting the subject matter hereof and supersedes all
prior discussions and understandings.
(k) Confidentiality; Agreement of Meridian,
Xxxxx and Xxxxxx Not to Compete.
(i) The Meridian Parties acknowledge
that neither they nor any of their
respective agents or employees will
at any time during the term of this
Agreement and thereafter, either
directly or indirectly, use for his
or their own account, or disclose,
Confidential Information (as
hereafter defined) to any person,
firm or corporation except that
Confidential Information may be
disclosed to (aa) authorized
officers, directors and employees
of the Company or its affiliates,
(bb) to the extent necessary in
connection with the services
provided hereunder during the term
of this Agreement, to Meridian
personnel who in Xxxxx'x and
Xxxxxx'x good faith judgment have a
need to be familiar with or aware
of the Confidential Information in
order to perform their
responsibilities to the Company
provided that such personnel are
bound by the terms of this
Agreement, (cc) to professionals
retained (x) by or on behalf of the
Company, or (y) by Meridian, to
assist it in the execution of or
the performance of services under
this Agreement, and (dd) as
appropriate, to the Committees,
Fidelity, Bear Xxxxxxx and to other
persons or entities bound by the
terms of a valid confidentiality
agreement with the Company. As
used herein, Confidential
Information means information of
any kind, nature or description
which is disclosed to or otherwise
known by or to the Meridian Parties
(which information is not generally
known in the business in which the
Company is engaged) or which
information relates to specific
investment opportunities within the
scope of the Company's business
which were considered by the
Meridian Parties or the Company
during the term of this Agreement.
(ii) During a period of one year
following the termination or
expiration of this Agreement, the
Meridian Parties shall not induce
any current employee (or an
employee terminated within the then
most recent twelve (12) month
period) of the Company or any of
its subsidiaries to terminate his
or her employment by the Company or
its subsidiaries in order to obtain
employment with any other person,
firm or corporation.
(iii) For a period of one year
following the termination or
expiration of this Agreement,
neither Xxxxx nor Xxxxxx shall
serve as an officer, director,
employee of or consultant to any
retailer with annual sales in
excess of $50 million that
specializes in and derives fifty
percent or more of their business
from young men's and/or young
women's casual sportswear, or
fashion forward attire, including
but not limited to The Gap, Inc.,
Structure, Abercrombie & Xxxxx,
Xxxxxx Brothers and their
respective parents, subsidiaries,
divisions and affiliates.
(l) Specific Performance. The parties agree
that irreparable damage will result if this Agreement is not
performed in accordance with its terms, and the parties
agree that any damages available at law for a breach of this
Agreement would not be an adequate remedy. Therefore, the
provisions hereof and the obligations of the parties
hereunder shall be enforceable in a court of equity, or
other tribunal with jurisdiction, by a decree of specific
performance, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such
remedies and all other remedies provided for in this
Agreement shall, however, be cumulative and not exclusive
and shall be in addition to any other remedies that a party
may have under this Agreement, at law or in equity.
(m) Effective Date Defined. For purposes of
this Agreement, the term "effective date" shall mean the
date on which the Company makes the initial distribution of
cash, other property and/or securities to parties-in-
interest pursuant to the Plan.
(n) Permanent Management. Notwithstanding
the provisions of paragraph 7(b)(i) of this Agreement,
nothing in this Agreement shall preclude the Company from
employing during the term of this Agreement the New CEO. In
addition to ease the transition to the New CEO, the Company
may terminate this Agreement upon delivery of written notice
of such termination to Meridian, provided, however,
(i) Meridian shall remain entitled to Management Fees
through July 31, 1995 (as such date may be extended pursuant
to paragraph 2), and (ii) the Company shall pay to Meridian
any Bonus Fee if, when and to the extent such Bonus Fee is
payable pursuant to paragraph 4(b).
In witness whereof, the parties have executed this
Agreement as of the date and year first above written.
Company:
Merry-Go-Round Enterprises,
Inc.
____________________________ By: /s/Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Exec. VP/CFO
Meridian:
Meridian Ventures, Inc.
6/30/95 By: /s/Xxxxxx X.
Xxxxx
Name: Xxxxxx X. Xxxxx
Title: CEO
