EXHIBIT 10.07
EMPLOYMENT AGREEMENT OF XXXXXXX XXXXXXX
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 3, 2001, by and between
Xxxxxx Xxxxxx, Ltd., a Delaware corporation (the "Company"), and XXXXXXX
XXXXXXX, an individual residing at 000 Xxxx 00xx Xxxxxx, Xxx. 00X, Xxx Xxxx, XX
00000 (the "Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to secure the services of the Executive
upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
SECTION 1. EMPLOYMENT. The Company hereby employs Executive and the
Executive hereby accepts such employment, as the Company's Executive Vice
President and Chief Operating Officer, subject to the terms and conditions set
forth in this Agreement.
SECTION 2. DUTIES; EXCLUSIVE SERVICES; BEST EFFORTS. The Executive
shall perform all duties incident to the position of Executive Vice President
and Chief Operating Officer as well as any other duties as may from time to time
be assigned by the President of the Company or her designee, and agrees to abide
by all By-laws, policies, practices, procedures or rules of the Company. The
Executive agrees to devote his best efforts, energies and skill to the discharge
of the duties and responsibilities attributable to his position, and to this
end, he will devote his full business time and attention exclusively to the
business and affairs of the Company. The Executive also agrees that he
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shall not take personal advantage of any business opportunities which arise
during his employment and which may benefit the Company. All material facts
regarding such opportunities must be promptly reported to the President for
consideration by the Company. Notwithstanding the foregoing, the Executive may
donate his time and efforts to charitable causes so long as such endeavors do
not effect his ability to perform his duties under this Agreement.
SECTION 3. TERM OF EMPLOYMENT; VACATION.
(a) Unless extended in writing by both the Company and the
Executive, the term of the Executive's employment shall be for a period of
twenty four (24) months commencing on the date hereof, subject to earlier
termination by the parties pursuant to Sections 5 and 6 hereof (the "Term").
(b) The Executive shall be entitled to three (3) weeks
vacation during each year of the Term.
SECTION 4. COMPENSATION OF EXECUTIVE.
4.1 SALARY. The Company shall pay to Executive a base salary
of Two Hundred Twenty Five Thousand ($225,000) dollars per annum, subject to
increases in accordance with the terms of the last sentence of this Section 4.1
(the "Base Salary"), less such deductions as shall be required to be withheld by
applicable law and regulations. The Base Salary payable to Executive shall be
paid at such regular weekly, biweekly or semi-monthly time or times as the
Company makes payment of its regular payroll in the regular course of business.
Commencing on the first anniversary of the date hereof, and on each anniversary
thereafter during the Term, the Base Salary shall be increased by 5% of the then
Base Salary.
4.2 SIGNING BONUS. On the date hereof and upon the execution
of this Agreement by the parties, the Executive shall receive non-qualified
stock options (or in lieu thereof, at Executive's option, and to the extent
available, incentive stock options) exercisable for an aggregate of 75,000
shares at an exercise price equal to the closing price of the Company's common
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stock on January 2, 2001 as reported by The Nasdaq Stock Market. The option
shall vest in four equal installments on the last day of each fiscal quarter
commencing on March 31, 2001.
4.3 PERFORMANCE BONUSES.
(a) During the term of this Agreement, the Executive shall be entitled
to receive a cash performance bonus based upon the Company's net earnings before
the payment of interest expenses and taxes and deductions for depreciation
("EBIT-D") as reflected on the Company's annual report on Form 10-K (or its
annual financial statements in the event that the Company no longer prepares
annual reports on Form 10-K). By April 15, 2002 and 2003, the Company shall pay
to the Executive a cash bonus equal to two percent (2%) of the amount by which
the aggregate EBIT-D for the fiscal year ending on the most recent December 31st
exceeds EBIT-D for the fiscal year ending on the preceding December 31st (the
"Annual Cash Bonus"). For example, if EBIT-D for the year ending December 31,
2001 equals $20,000,000, and EBIT-D for the year ending December 31, 2000 was
$15,000,000, the Executive would be entitled to receive an Annual Cash Bonus
equal to $100,000 ($20,000,000 - $15,000,000 = $5,000,000 x .02 = $100,000).
Notwithstanding the foregoing, under no circumstances will the Executive be
entitled to receive an Annual Cash Bonus in excess of one hundred fifty percent
(150%) the then applicable Base Salary.
(b) In addition to the Annual Cash Bonus, the Executive shall be shall
be entitled to receive a one-time cash bonus of $125,000 in the event that the
aggregate EBIT-D for any four (4) consecutive fiscal quarters during the Term
equals or exceeds $40,000,000. Such bonus shall be paid within sixty (60) days
following the end of the last applicable fiscal quarter.
(c) On each June 30th during the Term the Executive shall be entitled
to receive non-qualified stock options (the "Option Bonus") to purchase a number
of shares of Common Stock equal to thirty percent (30%) of the dollar amount of
the Annual Cash Bonus due for the fiscal year ending on the preceding December
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31st (i.e. if the Cash Bonus equals $100,000, then the Executive shall receive
options to purchase 30,000 shares of Common Stock). The options comprising the
Option Bonus shall vest quarterly over a one (1) year period commencing on the
September 30th following the date of grant and be exercisable at a price equal
to the closing bid price of the Company's shares of Common Stock on the date of
grant as reported by The Nasdaq Stock Market.
4.4 EXPENSES. During the Term, the Company shall promptly
reimburse the Executive for all reasonable and necessary travel expenses and
other disbursements incurred by the Executive on behalf of the Company, in
performance of the Executive's duties hereunder, assuming Executive has received
prior approval for such travel expenses and disbursements by the Company to the
extent possible consistent with corporate practices with respect to the
reimbursement of expenses incurred by the Company's senior executives. In
addition, the Company shall secure $120,000 of long term disability insurance
coverage for the Executive. The premium for such policy shall be paid 75% by the
Company and 25% by the Executive. The Company also agrees to pay (i) reasonable
expenses incurred by the Executive in connection with his operation of a
cellular telephone, and (ii) $500 per month for expenses incurred by the
Executive in connection with his ownership and operation of an automobile.
4.5 BENEFITS. The Executive shall be permitted during the
Term to participate in any hospitalization or disability insurance plans, health
programs, pension plans, bonus plans or similar benefits that may be available
to other executives of the Company (including coverage under any officers and
directors liability insurance policy), subject to such eligibility rules as are
applied to senior managers generally.
5. DEATH OR DISABILITY OF THE EXECUTIVE. If the Executive
(i) dies or (ii) is incapacitated or disabled by accident, sickness or otherwise
so as to render the Executive mentally or physically incapable of performing the
services required to be performed under this Agreement for a period of 90
consecutive days or 120 days in any period of 360 consecutive days (a
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"Disability"), the Company may, at the time or during the period of such
Disability, at its option, terminate the employment of the Executive under this
Agreement immediately upon giving the Executive written notice to that effect.
6. TERMINATION.
(a) The Company may terminate the employment of the Executive
and all of the Company's obligations under this Agreement at any time for Cause
(as hereinafter defined) by giving the Executive notice of such termination,
with reasonable specificity of the details thereof. "Cause" shall include,
without limitation, the following: (i) failure or neglect, by the Executive to
perform the duties of the Executive's position; (ii) failure of the Executive to
obey orders given by the Company or his supervisors; (iii) misconduct by the
Executive in connection with the performance of any of his duties, including,
without limitation, misappropriation of funds or property of the Company,
securing or attempting to secure personally any profit in connection with any
transaction entered into on behalf of the Company, misrepresentation to the
Company, or any violation of law or regulations on Company premises or to which
the Company is subject; (iv) commission by the Executive of an act involving
moral turpitude, dishonesty, theft or unethical business conduct, or conduct
which impairs or injures the reputation of, or xxxxx, the Company; (v)
disloyalty by the Executive, including without limitation, aiding a competitor;
(vi) failure by the Executive to devote his full business time and best efforts
to the Company's business and affairs; (vii) failure by the Executive to work
exclusively for the Company; (viii) failure to fully cooperate in any
investigation by the Company; (ix) any material breach of this Agreement or
Company rules; (x) any other act of misconduct by the Executive; or (xi) the
Executive's abuse of alcohol or other drugs or controlled substances. A
termination pursuant to this Section 6(a) shall take effect 20 days after the
giving of written notice to the Executive unless the Executive shall, during
such 20-day period, remedy to the reasonable satisfaction of the Board of
Directors of the Company the misconduct, disregard, abuse or breach specified in
such notice; PROVIDED, HOWEVER, that such termination shall take effect
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immediately upon the giving of such notice if the Board of Directors of the
Company shall, in its reasonable discretion, have determined that such
misconduct, disregard, abuse or breach is not remediable (which determination
shall be stated in such notice).
(b) The Company may terminate the employment of the Executive
and all of the Company's obligations under this Agreement (except as hereinafter
provided) at any time during the Term without Cause by giving the Executive
written notice of such termination, to be effective 15 days following the giving
of such written notice.
(c) The Executive may terminate this Agreement by delivering
written notice to the Company within thirty (30) days following the effective
date of a Change of Control.
As used herein, the term "Change of Control" shall mean: (i)
when any "person" as defined in Section 3(a)(9) of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act"), and as used in Section 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d) of the Exchange
Act, but excluding the Company or any subsidiary or any affiliate of the Company
or any employee benefit plan sponsored or maintained by the Company or any
subsidiary of the Company (including any trustee of such plan acting as
trustee), becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities; or (ii)
when, during any period of twenty-four (24) consecutive months, the individuals
who, at the beginning of such period, constitute the Board of Directors (the
"Incumbent Directors") cease for any reason other than death to constitute at
least a majority thereof, provided, however, that a director who was not a
director at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month
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period) or through the operation of this proviso; or (iii) the occurrence of a
transaction requiring stockholder approval for the acquisition of the Company by
an entity other than the Company or a subsidiary or an affiliated company of the
Company through purchase of assets, or by merger, or otherwise.
(d) The Executive may terminate this Agreement upon twenty
(20) days prior written notice (i) with Good Reason, or (ii) without Good
Reason. "Good Reason" shall mean (i) the Company materially diminished the
duties and responsibilities of the Executive or (ii) the Company breached a
material obligation under this Agreement and such breach has not been remedied
within the twenty (20) day notice period set forth above.
For convenience of reference, the date upon which any termination of
the employment of the Executive pursuant to Sections 5 or 6 shall be effective
shall be hereinafter referred to as the "Termination Date".
7. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) Upon the termination of the Executive's employment for
Cause, neither the Executive nor the Executive's beneficiaries or estate shall
have any further rights to compensation under this Agreement or any claims
against the Company arising out of this Agreement, except the right to receive
(i) the unpaid portion of the Base Salary provided for in Section 4.1, earned
through the Termination Date (the "Unpaid Salary Amount"), and (ii)
reimbursement for any expenses for which the Executive shall not have
theretofore been reimbursed, as provided in Section 4.6 (the "Expense
Reimbursement Amount"). All options granted to the Executive shall terminate on
the Termination Date.
(b) Upon the termination of the Executive's employment (i) as
a result of the Executive's death or Disability, or (ii) the termination of this
Agreement by the Executive without Good Reason, neither the Executive nor the
Executive's beneficiaries or estate shall have any further rights to
compensation under this Agreement or any claims against the Company arising out
of this Agreement, except the right to receive (x) the Unpaid Salary Amount, (y)
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the Expense Reimbursement Amount and (z) accrued and unpaid amounts owed to the
Executive under Section 4.3 hereof through the Termination Date, including a
pro-rata entitlement to such amounts equal to the award to which the Executive
would have been entitled at the end of the applicable fiscal period pro-rated
for the period of the Executive's employment during such fiscal period
(collectively, the "Additional Payments").
(c) Upon the termination of the Executive's employment without
Cause and not as a result of a Disability or by the Executive for Good Reason,
neither the Executive nor the Executive's beneficiaries or estate shall have any
further rights to compensation under this Agreement or any claims against the
Company arising out of this Agreement, except the Executive shall have the right
to receive (i) the Unpaid Salary Amount, (ii) the Expense Reimbursement Amount,
(iii) severance compensation equal to the Base Salary for the lesser of (a) the
remaining term of this Agreement (as if this Agreement was not terminated) and
(b) twelve (12) months, all of which is payable within thirty (30) days
following the Termination Date and (iv) the Additional Payments.
(d) Upon the termination of this Agreement by the Executive in
accordance with Section 6(c), neither the Executive nor the Executive's
beneficiaries or estate shall have any further rights to compensation under this
Agreement or any claims against the Company arising out of this Agreement,
except the Executive shall have the right to receive (i) the Unpaid Salary
Amount, (ii) the Expense Reimbursement Amount, (iii) severance compensation
equal to the Base Salary for the remaining term of this Agreement (as if this
Agreement was not terminated) and (iv) the Additional Payments.
8. CONFIDENTIAL INFORMATION; INVENTIONS. (a) Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited to its
customer list, products, know-how, and business plans. Executive acknowledges
that such information is of great value to the Company, is the sole property of
the Company, and has been and will be acquired by him in confidence. In
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consideration of the obligations undertaken by the Company herein, Executive
will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any information acquired by Executive during the
course of his employment, which is treated as confidential by the Company,
including but not limited to its customer list, not otherwise in the public
domain, other than in the ordinary course of business during his employment
hereunder. The provisions of this Section 8 shall survive Executive's employment
hereunder.
(b) The Company has hired the Executive to work full time so
that anything the Executive produces during the Term and in connection with his
performance under this Agreement is the property of the Company. Any writing,
invention, design, system, process, development or discovery conceived,
developed, created or made by the Executive, alone or with others, during the
period of his employment hereunder and applicable to the business of the
Company, whether or not patentable, registrable, or copyrightable shall become
the sole and exclusive property of the Company.
(c) The Executive shall disclose the same promptly and
completely to the Company and shall, during the period of his employment
hereunder and at any time and from time to time hereafter, (i) execute all
documents requested by the Company for vesting in the Company the entire right,
title and interest in and to the same, (ii) execute all documents requested by
the Company for filing such applications for and procuring patents, trademarks,
service marks or copyrights as the Company, in its sole discretion, may desire
to prosecute, and (iii) give the Company all assistance it may reasonably
require, including the giving of testimony in any suit, action, investigation or
other proceeding, in order to obtain, maintain and protect the Company's right
therein and thereto.
9. COVENANT NOT TO COMPETE.
(a) Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary. The parties confirm that it
is reasonably necessary for the protection of Company that Executive agree, and
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accordingly, Executive does hereby agree, that he shall not, directly or
indirectly, at any time during the term of the Agreement and the "Restricted
Period" (as defined in Section 9(e) below):
(i) except as provided in Subsection (d)
below, be engaged in the manufacturing, sourcing,
sale, marketing or distribution of footwear products
or provide technical assistance, advice or counseling
regarding the footwear industry to or with
____________________ or any affiliate of any such
entities (collectively, the "Footwear Companies") or
transact business, either on his own behalf or as an
officer, director, stockholder, partner, consultant,
associate, employee, owner, agent, creditor,
independent contractor, or co-venturer of any third
party with any of the Footwear Companies; or
(ii) employ or engage, or cause or
authorize, directly or indirectly, to be employed or
engaged, for or on behalf of herself or any third
party, any employee or agent of Company or any
affiliate thereof.
(b) Executive hereby agrees that he will not, directly or
indirectly, for or on behalf of himself or any third party, at any time during
the term of the Agreement and during the Restricted Period solicit any customers
of the Company or any affiliate thereof in a manner which directly or indirectly
competes with the Company.
(c) If any of the restrictions contained in this Section 9
shall be deemed to be unenforceable by reason of the extent, duration or
geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
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scope, or other provisions hereof, and in its reduced form this Section shall
then be enforceable in the manner contemplated hereby.
(d) This Section 9 shall not be construed to prevent Executive
from owning, directly or indirectly, in the aggregate, an amount not exceeding
one percent (1%) of the issued and outstanding voting securities of any class of
any company whose voting capital stock is traded on a national securities
exchange or on the over-the-counter market other than securities of the Company.
(e) The term "Restricted Period," as used in this Section 9,
shall mean the period of Executive's actual employment hereunder, and if the
Executive resigns without Good Reason, the six month period commencing on the
Termination Date.
(f) The provisions of this Section 9 shall survive the end of
the Restricted Period as provided in Section 9(e) hereof.
(g) In the event that the Executive breaches the terms and
provisions of Section 9(a)(i) above, the Company may terminate all unvested
options comprising the Option Bonus and shall be the Company's sole remedy
hereunder.
10. MISCELLANEOUS.
10.1 REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVE.
The Executive hereby represents and warrants to the Company as follows: (i) the
Executive has the legal capacity and unrestricted right to execute and deliver
this Agreement and to perform all of his obligations hereunder; (ii) the
execution and delivery of this Agreement by the Executive and the performance of
his obligations hereunder will not violate or be in conflict with any fiduciary
or other duty, instrument, agreement, document, arrangement or other
understanding to which the Executive is a party or by which he is or may be
bound or subject; and (iii) the Executive is not a party to any instrument,
agreement, document, arrangement or other understanding with any person (other
than the Company) requiring or restricting the use or disclosure of any
confidential information or the provision of any employment, consulting or other
services, excluding certain provisions regarding confidentiality contained in
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that certain Consulting Agreement dated October 27, 2000 by and between The
Stride Rite Corporation and the Executive. The Executive agrees to indemnify the
Company for any costs, liabilities or expenses incurred by the Company as a
result of a breach by the Executive of this Section 10.1.
10.2 INJUNCTIVE RELIEF. Executive acknowledges that the
services to be rendered under the provisions of this Agreement are of a special,
unique and extraordinary character and that it would be difficult or impossible
to replace such services. Accordingly, Executive agrees that any breach or
threatened breach by him of Section 8 or Section 9 of this Agreement shall
entitle the Company, in addition to all other legal remedies available to it, to
apply to any court of competent jurisdiction to seek to enjoin such breach or
threatened breach. The parties understand and intend that each restriction
agreed to by Executive hereinabove shall be construed as separable and divisible
from every other restriction, that the unenforceability of any restriction shall
not limit the enforceability, in whole or in part, of any other restriction, and
that one or more or all of such restrictions may be enforced in whole or in part
as the circumstances warrant. In the event that any restriction in this
Agreement is more restrictive than permitted by law in the jurisdiction in which
Company seeks enforcement thereof, such restriction shall be limited to the
extent permitted by law.
10.3 ASSIGNMENTS. Neither Executive nor the Company may
assign or delegate any of their rights or duties under this Agreement without
the express written consent of the other.
10.4 ENTIRE AGREEMENT. This Agreement constitutes and
embodies the full and complete understanding and agreement of the parties with
respect to Executive's employment by Company, supersedes all prior
understandings and agreements, whether oral or written, between the Executive
and Company, and shall not be amended, modified or changed except by an
instrument in writing executed by the party to be charged. The invalidity or
partial invalidity of one or more provisions of this Agreement shall not
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invalidate any other provision of this Agreement. No waiver by either party of
any provision or condition to be performed shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
10.5 BINDING EFFECT. This Agreement shall inure to the
benefit of, be binding upon and enforceable against, the parties hereto and
their respective successors, heirs, beneficiaries and permitted assigns.
10.6 HEADINGS. The headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered, sent by
registered or certified mail, return receipt requested, postage prepaid, or by
private overnight mail service (e.g. Federal Express) to the party at the
address set forth above or to such other address as either party may hereafter
give notice of in accordance with the provisions hereof. Notices shall be deemed
given on the sooner of the date actually received or the third business day
after sending.
10.8 GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to such State's conflicts of laws provisions. Each of the
parties hereto hereby irrevocably consents and submits to the exclusive
jurisdiction of the Supreme Court of the State of New York, in New York County,
and of the United States District Court for the Southern District of New York in
connection with any suit, action or other proceeding concerning the
interpretation of this Agreement or enforcement of Sections 8 or 9 of this
Agreement. The Executive waives and agrees not to assert any defense that the
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court lacks jurisdiction, venue is improper, inconvenient forum or otherwise.
The Executive waives the right to a jury trial and agrees to accept service of
process by certified mail at the Executive's last known address.
10.9 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one of the same instrument.
10.10 SEPARABILITY. If any of the restrictions contained in
this Agreement shall be deemed to be unenforceable by reason of the extent,
duration or geographical scope thereof, or otherwise, then the court making such
determination shall have the right to reduce such extent, duration, geographical
scope, or other provisions hereof, and in its reduced form this Agreement shall
then be enforceable in the manner contemplated hereby.
10.11 POST EMPLOYMENT OBLIGATIONS. (a) All records, files,
lists, including computer generated lists, drawings, documents, equipment and
similar items relating to the Company's business which the Executive shall
prepare or receive from the Company shall remain the Company's sole and
exclusive property. Upon termination of this Agreement, the Executive shall
promptly return to the Company all property of the Company in his possession.
The Executive further represents that he will not copy or cause to be copied,
print out or cause to be printed out any software, documents or other materials
originating with or belonging to the Company. The Executive additionally
represents that, upon termination of his employment with the Company, he will
not retain in his possession any such software, documents or other materials.
(b) The Executive agrees that during his employment he shall,
at the request of the Company, render all assistance and perform all lawful acts
that the Company considers necessary or advisable in connection with any
litigation involving the Company or any director, officer, employee,
shareholder, agent, representative, consultant, client or vendor of the Company.
In addition, following the Executive's employment with the Company, the
Executive shall provide the assistance and perform the acts set forth in the
preceding sentence at such times as are reasonably acceptable to him.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
XXXXXX XXXXXX, LTD.
By: /s/ XXXXXX XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title:
/s/ XXXXXXX XXXXXXX
-------------------------------------
Xxxxxxx Xxxxxxx
