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