EXHIBIT 10.07
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of August 28, 1998
(the "Effective Date"), by and between G+G Retail, Inc., a Delaware corporation
(the "Company"), and Scott Galin, an individual resident in 60 Hickory Drive,
East Hills, NY 11576 (the "Executive").
RECITALS
Concurrently with the execution of this Agreement (i) the Company is
purchasing certain assets and assuming certain liabilities pursuant to the Asset
Purchase Agreement, dated as of July 6, 1998 among the Company, G & G Shops,
Inc., the subsidiaries of G & G Shops, Inc. named therein, the subsidiaries of
Petrie Retail, Inc. named therein and PSL, Inc., as amended (the "Asset Purchase
Agreement") and (ii) Pegasus G&G Retail, L.P., Pegasus G&G Retail II, L.P.,
(collectively, the "Investors"), the Executive and the other stockholders of G&G
Retail Holdings, Inc., the Company's parent company ("Parent Company") are
entering into a stockholders agreement (the "Stockholders Agreement"), providing
for various rights and obligations of Parent Company's stockholders. The Company
and the Investors desire the Executive's continued employment with the Company,
and the Executive wishes to accept such continued employment, upon the terms and
subject to the conditions set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.
"Agreement" shall mean this Employment Agreement, including the schedules
and exhibits hereto, as modified, supplemented or amended from time to time.
"Asset Purchase Agreement" shall have the meaning set forth in the
Recitals to this Agreement.
"Basic Compensation" shall have the meaning set forth in Section 3.1(b).
"Benefits" shall have the meaning set forth in Section 3.1(b).
"Board of Directors" shall mean the board of directors of the Company.
"Bonus Compensation" shall have the meaning set forth in Section 3.2(a).
"Cause" shall have the meaning set forth in Section 4.3.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Confidential Information" shall mean any and all knowledge and
information relating to the business and affairs of the Company or any of its
affiliates, their products, processes and/or services and their customers,
suppliers, landlords, creditors, shareholders, contractors, agents, consultants
and employees ("Related Persons"), that is or is intended by any of them to be
of a confidential nature, including, but not limited to, any and all knowledge
and information relating to products, research, development, inventions,
manufacture, purchasing, accounting, finances, costs, profit margins, marketing,
merchandising, selling, customer lists, customer requirements and personnel,
pricing, pricing methods, computer programs and software, databases and data
processing and any and all other such knowledge, information and materials,
heretofore or hereafter during the term of this Agreement, conceived, designed,
created, used or developed by or relating to the Company, any of its affiliates
or any Related Person; Confidential Information does not include any information
that may be in the public domain or come into the public domain not as a result
of a breach by the Executive of any of the terms or provisions of this
Agreement.
"Designated Beneficiary" shall have the meaning set forth in Section 4.5.
"Disability" shall have the meaning set forth in Section 4.2.
"Effective Date" shall have the meaning set forth in the first paragraph
of this Agreement.
"Employment Period" shall have the meaning set forth in Section 2.2(a).
"Executive" shall have the meaning set forth in the first paragraph of
this Agreement.
"Good Reason" shall have the meaning set forth in Section 4.4.
"Investors" shall have the meaning set forth in the Recitals to this
Agreement.
"Jay Galin Employment Agreement" shall mean the Employment Agreement,
dated as of the date hereof, between the Company and Jay Galin.
"Parent Company" shall have the meaning set forth in the first paragraph
of this Agreement.
"Person" shall mean any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, governmental body or other
entity.
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"Post-Employment Period" shall have the meaning set forth in Section 6.2.
"Proprietary Items" shall have the meaning set forth in Section 5.2(d).
"Salary" shall have the meaning set forth in Section 3.1(a).
"Stockholders Agreement" shall have the meaning set forth in the Recitals
to this Agreement.
2. EMPLOYMENT TERMS AND DUTIES
2.1 EMPLOYMENT
Upon consummation of the transactions contemplated in the Asset
Purchase Agreement, the Company employs the Executive, and the Executive accepts
employment by the Company, upon the terms and subject to the conditions set
forth in this Agreement.
2.2 TERM
Subject to the provisions of Section 4, the term of the Executive's
employment under this Agreement shall be five years, beginning on the Effective
Date and ending on the fifth anniversary of the Effective Date (the "Employment
Period").
2.3 DUTIES
(a) Subject to paragraph (b) below, the Executive shall have such
duties as are assigned or delegated to the Executive by the Board of Directors,
and shall initially serve as President and Chief Operating Officer of the
Company. The Executive shall (a) devote his entire business time, attention,
skill and energy exclusively to the business of the Company, (b) serve the
Company faithfully, diligently and to the best of his ability under the
direction of the Board of Directors, (c) use his best efforts to promote the
success of the Company's business and (d) cooperate fully with the Board of
Directors in the advancement of the best interests of the Company. The Executive
shall not, without the prior written consent of the Board of Directors (x) do
anything or permit anything to be done at his direction inconsistent with his
duties to the Company or its affiliates or opposed to their best interests, or
(y) become an officer, director, employee or consultant of, or otherwise become
associated with or engaged in, any business other than that of the Company or
the Parent Company. Nothing in this Section 2.3 shall prevent the Executive from
engaging in additional activities in connection with personal investments and
community affairs that are not inconsistent with the Executive's duties under
this Agreement. If the Executive is elected as a director of the Company or as a
director or officer of any of its affiliates, the Executive shall fulfill his
duties as such director or officer without additional compensation. During the
Employment Period, the Executive shall be headquartered in New York City.
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(b) In the event Jay Galin exercises his Consulting Option (as such
term is defined in the Jay Galin Employment Agreement) or his employment with
the Company is terminated for any reason, the Executive shall serve as the Chief
Executive Officer of the Company and shall perform the duties of such office in
accordance with the standards and provisions set forth above in paragraph (a)
for the remainder of the Employment Period.
3. COMPENSATION AND BENEFITS
3.1 BASIC COMPENSATION
(a) Salary. The Executive shall be paid an initial annual salary of
$525,000 ("Salary"), which shall be payable in equal periodic installments
according to the Company's customary payroll practices, but no less frequently
than monthly. On each anniversary of the commencement of the Employment Period,
the Executive's Salary shall be increased by $25,000 until the Executive becomes
the Chief Executive Officer of the Company in accordance with Section 2.3(b). In
the event that the Executive becomes the Chief Executive Officer of the Company
in accordance with Section 2.3(b), the Executive's Salary shall be increased to
$750,000. Thereafter, on each anniversary of the date on which the Executive
became the Chief Executive Officer of the Company, the Executive's Salary shall
be increased by $25,000.
(b) Benefits. The Company shall maintain for the Executive during
the Employment Period, at no cost to the Executive, hospitalization, medical,
surgical, dental and other employee benefit plans of the Company currently in
effect, as set forth on Schedule 3.1 hereto including, without limitation, so
called Blue Cross-Blue Shield and major medical coverage, (collectively the
"Benefits" and, together with the Salary, "Basic Compensation"), providing for
direct payment or reimbursement to the Executive of substantially all medical
and dental expenses incurred by the Executive, his spouse and dependent members
of his family during the Employment Period.
The Company shall furnish to the Executive, during the Employment
Period, an automobile comparable to that currently being furnished to Jay Galin
by G&G Shops, Inc., with a similar model automobile being furnished to the
Executive every two years during the Employment Period. The Company shall pay
all expenses relating to the maintenance and business use of such automobile,
including, without limitation, insurance, repairs and fuel.
(c) Expenses. The Company shall pay on behalf of the Executive (or
reimburse the Executive for) reasonable expenses incurred by the Executive at
the request of, or on behalf of, the Company in the performance of the
Executive's duties pursuant to this Agreement, and in accordance with the
Company's employment policies. The Executive shall file expense reports with
respect to such expenses in accordance with the Company's policies.
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3.2 BONUS COMPENSATION
(a) The Company shall implement a bonus plan for the benefit of the
senior management of the Company which plan shall provide for annual bonuses to
be paid to eligible members of the Company's management based on the Company
attaining certain annual EBITDA targets to be agreed upon and specified by the
holders of the Parent Company's shares of Class A common stock, par value $.001
per share and Class B common stock, par value $.001 per share.
The Executive will be eligible to receive collectively with Jay
Galin up to (and no more than) 50% of the aggregate bonus pool amount, provided,
that in no event shall the Executive receive a bonus amount greater than the
amount of his annual salary. The remainder of the bonus pool shall be
distributed as determined by the Executive and Jay Galin jointly.
The bonus plan shall terminate upon consummation by the Company of
an initial public offering of its common stock, at which time the Company will
consider replacing the bonus plan with a plan more appropriate for public
companies.
4. TERMINATION
4.1 EVENTS OF TERMINATION
The Employment Period, the Executive's Basic Compensation and Bonus
Compensation and any and all other rights of the Executive under this Agreement
or otherwise as an employee of the Company shall terminate (except as otherwise
provided in this Section 4):
(a) upon the death of the Executive;
(b) upon the Disability (as defined in Section 4.2) of the
Executive), immediately upon notice from either party to the other;
(c) upon termination by the Company for Cause (as defined in Section
4.3), on the date specified in Section 4.3; or
(d) upon termination by the Executive for Good Reason (as defined in
Section 4.4), on the date specified in Section 4.4.
4.2 DEFINITION OF "DISABILITY"
(a) For the purposes of this Section 4.2, the Executive shall be
deemed to have a Disability if (i) by reason of physical or mental incapacity,
the Executive shall not be able to perform his duties hereunder for a
consecutive period of six months or more or for a period in the aggregate of six
months in any consecutive period of twelve months; or (ii) when the Executive's
physician shall have determined that he shall not be able, by reason of physical
or mental disability,
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to devote his time and energy to the business of the Company for a continuous
period of six months or for a period in the aggregate of six months in a
consecutive period of twelve months. In the event that the Executive or the
Company shall dispute any determination of his Disability hereunder, the matter
shall be resolved by the determination of three physicians qualified to practice
medicine in the State of New York, one to be selected by each of the Company and
the Executive and the third to be selected by the designated physicians. During
the period in which the determination of the Executive's Disability shall be
under such review, the Executive shall continue to be treated for all purposes
of this Agreement as an employee of the Company, enjoying the full status with
full pay to which he would otherwise be entitled under this Agreement.
(b) The Company may, but shall not be obligated to, apply for and
pay the premiums upon disability insurance covering the Executive under policies
providing for the payment thereunder directly to the Executive. If the Executive
shall receive benefits under any of such policies, the Company shall be entitled
to deduct the amount equal to the benefits so received from the Salary which it
otherwise would be required to pay to the Executive as provided in Section
4.5(c).
4.3 DEFINITION OF FOR "CAUSE"
For purposes of Section 4.1, the phrase for "Cause" means: (i) the
failure, neglect or refusal by the Executive to perform his duties hereunder
(including, without limitation, his inability to perform his duties hereunder as
a result of alcohol abuse, chronic alcoholism or drug addiction); (ii) any
willful, intentional or grossly negligent act by the Executive having the effect
of injuring the reputation or business of the Company; (iii) the Executive's
conviction of a felony or a crime involving moral turpitude (including the entry
of a nolo contendere plea); and (iv) any other default, nonperformance or
violation by the Executive of any of the covenants, provisions or terms of this
Agreement. A termination for Cause as defined in clause (i) or (iv) of the
preceding sentence shall become effective only if (A) the Company shall have
given the Executive notice thereof describing the basis for such termination for
Cause, and (B) the Executive fails to cure such Cause within 10 business days
after receiving such notice (and the termination for Cause shall be effective
upon the expiration of such 10-business-day period if the Executive fails to
effect such cure); and a termination for Cause as defined in clause (ii) or
(iii) of the preceding sentence shall be effective at the time the Company gives
notice thereof to the Executive.
4.4 DEFINITION OF FOR "GOOD REASON"
For purposes of Section 4.1, the phrase for "Good Reason" means (i)
the Company effects a material reduction in the Executive's position or duties
from those set forth in Section 2.3 hereof, the Company fails to provide the
Executive with any material compensation or benefits to which he is entitled
pursuant to Section 3 hereof, or the Company commits any other material breach
of this Agreement; (ii) the Executive gives the Company notice of the event
described in clause (i) within 20 business days after its occurrence; and (iii)
the Company fails to cure such event within 10 business days after receiving
notice thereof (and the termination for Good Reason shall be
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effective upon the expiration of such 10-business-day period if the Company, as
applicable, fails to effect such cure).
4.5 TERMINATION PAY
Effective upon the termination of this Agreement, the Company shall
be obligated to pay the Executive (or, in the event of his death, his Designated
Beneficiary, as defined below) only such compensation as is provided in this
Section 4.5, and in lieu of all other amounts and in settlement and complete
release of all claims the Executive may have against the Company. For purposes
of this Section 4.5, the Executive's "Designated Beneficiary" shall be such
individual beneficiary or trust, located at such address, as the Executive may
designate by notice to the Company from time to time or, if the Executive fails
to give notice to the Company of such a beneficiary, the Executive's estate.
Notwithstanding the preceding sentence, the Company shall have no duty, in any
circumstances, to attempt to open an estate on behalf of the Executive, to
determine whether any beneficiary designated by the Executive is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any Person purporting to act as the Executive's
personal representative (or the trustee of a trust established by the Executive)
is duly authorized to act in that capacity or to locate or attempt to locate any
beneficiary, personal representative or trustee.
(a) Termination by the Executive for Good Reason or by the Company
Without Cause. In the event that during the Employment Period, the Executive
terminates his employment with the Company for Good Reason, or the Company
terminates the Executive's employment without Cause, then the Executive shall
receive from the Company (as severance pay and liquidated damages, in lieu of
any other rights or remedies which might otherwise be available to him under
this Agreement, and to the extent permitted by law, without any obligation on
the Executive's part to mitigate damages by seeking other employment or
otherwise and without any offset for any compensation earned as a result of any
such other employment or performance of other services) amounts equal to (and
payable at the same time and in the same manner as) the Salary payable pursuant
to Section 3.1(a) above and the bonus compensation described in Section 3.2(a)
above and all of the Benefits provided for in Section 3.1(b) above, which the
Executive would otherwise have been entitled to receive pursuant to this
Agreement, had he remained employed by the Company throughout the remainder of
the Employment Period as in effect immediately before such termination.
In case of any dispute as to the propriety of the termination of the
Executive's employment by the Company, the Company agrees to continue to provide
to the Executive all of the cash compensation and benefits that would be payable
to the Executive pursuant to the preceding sentence pending final resolution of
such dispute; the Executive shall be entitled to such legal or equitable damages
or relief as may be available to enforce his rights hereunder; and the Executive
shall be obligated to reimburse the Company for all such compensation and
benefits if it is finally determined that he was not entitled thereto. If such
termination is determined to be improper, the
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Company agrees to pay to the Executive all of his attorney's fees and expenses
arising from such dispute.
(b) Termination by the Company for Cause or by the Executive Without
Good Reason. If the Company terminates this Agreement for Cause, or if the
Executive terminates his employment other than for Good Reason, the Executive
shall be entitled to receive his Salary only through the date such termination
is effective, and shall not be entitled to any Bonus Compensation for the fiscal
year during which such termination occurs or any subsequent fiscal year.
(c) Termination upon Disability. The Company shall continue to pay
the Executive his Salary pursuant to Section 3.1(a) and continue to provide the
Executive with Benefits pursuant to Section 3.1(b) for a period of one year
after he shall be deemed to have a Disability. Thereafter, the Executive shall
be entitled to receive a salary at an annual rate equal to one-half of the
Salary as then in effect and shall continue to receive Benefits, in each case
for a further period of six months. Upon the expiration of such further
six-month period, the Executive shall not be entitled to receive any further
Salary or other compensation or benefits from the Company, until he shall cease
to have a Disability and shall have resumed his duties hereunder. In the event
the Executive dies as the result of a Disability, payments under this Section
4.5(c) shall cease and payments shall be made to the Executor's estate or
otherwise as provided in Section 4.5(d).
(d) Termination upon Death. In the event that the Executive shall
die during the Employment Period, or as a result of a Disability, the Company
shall pay to the Executive's Designated Beneficiary, the Salary and Bonus
Compensation otherwise payable to the Executive pursuant to Section 3 above for
a period of one year following the date of the Executive's death; provided, that
the foregoing obligation shall be contingent on the Company obtaining key man
life insurance to fund such obligation at a reasonable cost.
(e) Benefits. The Executive's accrual of, or participation in plans
providing for, the Benefits shall cease at the effective date of the termination
of this Agreement, and the Executive shall be entitled to accrued Benefits
pursuant to such plans only as provided in such plans. The Executive shall not
receive, as part of his termination pay pursuant to this Section 4, any payment
or other compensation for any vacation, holiday, sick leave or other leave
unused on the date the notice of termination is given under this Agreement,
except as otherwise provided in this Agreement.
5. NON-DISCLOSURE COVENANT
5.1 ACKNOWLEDGMENTS BY THE EXECUTIVE
The Executive acknowledges that (a) during the Employment Period and
as a part of his employment, the Executive shall be afforded access to
Confidential Information; (b) public disclosure of such Confidential Information
could have an adverse effect on the Company and its business; (c) the Company
has required that the Executive make the covenants in this Section 5 as a
condition to its consummation of the transactions contemplated in the Asset
Purchase Agreement
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and the Investors have required that the Executive make the covenants in this
Section 5 as a condition to their investment in the Parent Company and their
entering into the Stockholders Agreement; and (d) the provisions of this Section
5 are reasonable and necessary to prevent the improper use or disclosure of
Confidential Information.
5.2 AGREEMENTS OF THE EXECUTIVE
In consideration of the compensation and benefits to be paid or
provided to the Executive by the Company under this Agreement, the Executive
covenants as follows:
(a) During and following the Employment Period, the Executive shall
hold in confidence the Confidential Information and shall not disclose it to any
Person except with the specific prior written consent of the Company or except
as otherwise expressly permitted by the terms of this Agreement or as required
by law or a court of competent jurisdiction; provided, that in the event
disclosure is required by law or a court of competent jurisdiction, the
Executive shall, prior to disclosing any Confidential Information, promptly
notify the Company of such disclosure requirement and provide the Company with
an opportunity to contest such disclosure requirement.
(b) Any trade secrets of the Company shall be entitled to all of the
protections and benefits under applicable law. If any information that the
Company deems to be a trade secret is found by a court of competent jurisdiction
not to be a trade secret for purposes of this Agreement, such information shall,
nevertheless, be considered Confidential Information for purposes of this
Agreement. The Executive hereby waives any requirement that the Company submit
proof of the economic value of any trade secret or post a bond or other
security.
(c) None of the foregoing obligations and restrictions applies to
any part of the Confidential Information that the Executive demonstrates was or
became generally available to the public other than as a result of disclosure by
the Executive.
(d) The Executive shall not remove from the Company's premises
(except to the extent such removal is for purposes of the performance of the
Executive's duties at home or while traveling, or except as otherwise
specifically authorized by the Company), any design, document, record, notebook,
plan, model, or computer software, whether embodied in a disk or in any other
form (collectively, the "Proprietary Items"). The Executive recognizes that, as
between the Company and the Executive, all of the Proprietary Items, whether or
not developed by the Executive, are the exclusive property of the Company. Upon
termination of this Agreement by either party, or upon the request of the
Company during the Employment Period, the Executive shall return to the Company
all of the Proprietary Items in the Executive's possession or subject to the
Executive's control, and the Executive shall not retain any copies, abstracts,
sketches or other physical embodiment of any of the Proprietary Items.
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5.3 DISPUTES OR CONTROVERSIES
The Executive recognizes that should a dispute or controversy
arising from or relating to this Agreement be submitted for adjudication to any
court, arbitration panel or other third party, the preservation of the secrecy
of Confidential Information may be jeopardized. All pleadings, documents,
testimony and records relating to any such adjudication shall be maintained in
secrecy and shall be available for inspection by the Company, the Executive and
their respective attorneys and experts, who shall agree, in advance and in
writing, to receive and maintain all such information in secrecy, except as may
be limited by them in writing.
6. NON-COMPETITION AND NON-INTERFERENCE
6.1 ACKNOWLEDGMENTS BY THE EXECUTIVE
The Executive acknowledges that: (a) the services to be performed by
him under this Agreement are of a special, unique, unusual, extraordinary and
intellectual character; (b) the Company's business is national in scope and its
products are marketed throughout the United States and in other countries,
territories and possessions; (c) the Company competes with other businesses that
are or could be located in any part of the United States and in other countries,
territories and possessions; (d) the Company has required that the Executive
make the covenants set forth in this Section 6 as a condition to the Company's
consummation of the transactions contemplated by the Asset Purchase Agreement
and the Investors have required that the Executive make the covenants in this
Section 6 as a condition to their investment in the Parent Company and their
entering into the Stockholders Agreement; and (e) the provisions of this Section
6 are reasonable and necessary to protect the Company's business.
6.2 COVENANTS OF THE EXECUTIVE
In consideration of the acknowledgments by the Executive, and in
consideration of the compensation and benefits to be paid or provided to the
Executive by the Company, the Executive covenants that he shall not, directly or
indirectly:
(a) during the Employment Period, except in the course of his
employment hereunder, and during the Post-Employment Period (as defined below),
engage or invest in, own, manage, operate, finance, control or participate in
the ownership, management, operation, financing or control of, be employed by,
associated with or in any manner connected with, lend the Executive's name or
any similar name to, lend the Executive's credit to or render services or advice
to, (i) any Person (other than the Company and the Parent Company) engaged in
any business whose products or activities compete in whole or in material part
with, or (ii) any part of any business which competes with, the products or
activities of the Company (which, with respect to the Post- Employment Period,
shall be deemed to include products and activities of the Company at the time of
termination or contemplated by the Company at the time of termination) anywhere
within the United States or in any other country, territory or possession in
which the Company is then doing
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business; provided, however, that the Executive may purchase or otherwise
acquire up to (but not more than) one percent of any class of securities of any
enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended;
(b) whether for the Executive's own account or for the account of
any other Person, at any time during the Employment Period and the
Post-Employment Period, solicit business of the same or similar type being
carried on by the Company, from any Person known by the Executive to be a
customer of the Company, whether or not the Executive had personal contact with
such Person during and by reason of the Executive's employment with the Company;
(c) whether for the Executive's own account or the account of any
other Person at any time during the Employment Period and the Post-Employment
Period (i) solicit, employ or otherwise engage as an employee, independent
contractor or otherwise, any person who is or was an employee of the Company at
any time during the Employment Period, or in any manner induce or attempt to
induce any employee of the Company to terminate his employment with the Company;
or (ii) interfere with the Company's relationship with any Person, including any
Person who, at any time during the Employment Period, was an employee,
contractor, supplier or customer of the Company; or
(d) at any time during or after the Employment Period, disparage the
Company or any of its shareholders, directors, officers, employees or agents.
For purposes of this Section 6.2, the term "Post-Employment Period"
means the period from the date of termination of this Agreement until the
earlier of (i) the date on which the Employment Period would have terminated
pursuant to Section 2.2 without earlier termination of this Agreement by the
Company or the Executive and (ii) the date which is eighteen months following
the date of termination of the Executive's employment with the Company.
6.3 BINDING NATURE AND DURATION OF COVENANTS; DISCLOSURE
If any covenant in Section 6.2 is held to be unreasonable, arbitrary
or against public policy, such covenant shall be considered to be divisible with
respect to scope, time and geographic area, and such lesser scope, time or
geographic area, or all of them, as a court of competent jurisdiction may
determine to be reasonable, not arbitrary and not against public policy, shall
be effective, binding, and enforceable against the Executive. The period of time
applicable to any covenant in Section 6.2 shall be extended by the duration of
any violation by the Executive of such covenant. The Executive shall, while the
covenant under Section 6.2 is in effect, give notice to the Company, within ten
days after accepting any other employment, of the identity of the Executive's
employer. The Company may notify such employer that the Executive is bound by
this Agreement and, at the Company's election, furnish such employer with a copy
of this Agreement or relevant portions thereof.
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7. GENERAL PROVISIONS
7.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY
The Executive acknowledges that the injury that would be suffered by
the Company as a result of a breach of any of the provisions of this Agreement
(including, without limitation, any provision of Section 5 or 6) would be
irreparable and that an award of monetary damages to the Company for such a
breach would be an inadequate remedy. Consequently, the Company shall have the
right, in addition to any other rights it may have, to obtain injunctive relief
to restrain any breach or threatened breach or otherwise to specifically enforce
any provision of this Agreement, and the Company shall not be obligated to post
bond or other security in seeking such relief. Without limiting the Company's
rights under this Section 7 or any other remedies of the Company, if the
Executive breaches any of the provisions of Section 5 or 6, the Company shall
have the right to cease making any payments otherwise due to the Executive under
this Agreement.
7.2 COVENANTS OF SECTIONS 5 AND 6 ARE ESSENTIAL AND INDEPENDENT
COVENANTS
The covenants by the Executive in Sections 5 and 6 are essential
elements of this Agreement, and without the Executive's agreement to comply with
such covenants, the Company would not have consummated the transactions
contemplated by the Asset Purchase Agreement, the Investors would not have
purchased interests in the Parent Company or entered into the Stockholders
Agreement, and the Company would not have entered into this Agreement or
employed or continued the employment of the Executive. The Company and the
Executive have independently consulted their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by the
Company. The Executive's covenants in Sections 5 and 6 are independent
covenants, and the existence of any claim by the Executive against the Company
under this Agreement or otherwise, or against the Company, the Parent Company or
the Investors, shall not excuse the Executive's breach of any covenant in
Section 5 and 6. If the Executive's employment hereunder expires or is
terminated, this Agreement shall continue in full force and effect as is
necessary or appropriate to enforce the covenants and agreements of the
Executive in Sections 5 and 6.
7.3 REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE
The Executive represents and warrants to the Company that the
execution and delivery by the Executive of this Agreement do not, and the
performance by the Executive of the Executive's obligations hereunder shall not,
with or without the giving of notice or the passage of time, or both (a) violate
any judgment, writ, injunction or order of any court, arbitrator or governmental
agency applicable to the Executive; or (b) conflict with, result in the breach
of any provisions of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is or may
be bound.
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7.4 OBLIGATIONS CONTINGENT ON PERFORMANCE
The obligations of the Company hereunder, including its obligation
to pay the compensation provided for herein, are contingent upon the Executive's
performance of the Executive's obligations hereunder.
7.5 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
party in exercising any right, power or privilege under this Agreement shall
operate as a waiver of such right, power or privilege, and no single or partial
exercise of any such right, power or privilege shall preclude any other or
further exercise of such right, power or privilege or the exercise of any other
right, power or privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement may be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party shall be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party shall be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement.
7.6 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED
This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their respective successors, assigns, heirs and
legal representatives. This Agreement is personal to the parties hereto and
shall not be assignable by either party without the prior written consent of the
other.
7.7 NOTICES
All notices, consents, waivers and other communications under this
Agreement shall be made in writing and shall be deemed to have been duly given
when (a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt) or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
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If to the Company:
G+G Retail, Inc.
520 Eighth Avenue
New York, NY 10018
Attention: Jay Galin
Facsimile: (212) 695-4952
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, NY 10022-3598
Attention: Mark S. Selinger, Esq.
Facsimile: (212) 836-8689
If to the Executive:
Scott Galin
60 Hickory Drive
East Hills, NY 11576
Facsimile: (516) 621-4246
with a copy to:
Shack & Siegel, P.C.
530 Fifth Avenue, 16th Floor
New York, NY 10036
Attention: Donald Shack, Esq.
Facsimile: (212) 730-1964
7.8 ENTIRE AGREEMENT; AMENDMENTS
This Agreement, the Asset Purchase Agreement, the Stockholders
Agreement and the documents executed in connection with the Asset Purchase
Agreement and the Stockholders Agreement, contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, between the parties hereto with
respect to the subject matter hereof. This Agreement may not be amended orally,
but only by an agreement in writing signed by the parties hereto.
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7.9 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws
principles.
7.10 ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in the City of New York on
an expedited basis by a panel of three qualified independent arbitrators
selected on an expedited basis, one by the Executive, the second by the Company
and the third by the first two selected. If no arbitrator can be agreed upon by
the first two arbitrators within three business days of their selection, such
arbitrator shall be selected on an expedited basis in accordance with the rules
for commercial arbitration of the American Arbitration Association. Judgment may
be entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Company shall be entitled to seek a restraining order or
injunction in any court of competent jurisdiction to prevent, or to prevent any
continuation of, any violation of Sections 5 and 6. The fees and expenses of
such arbitration shall be fixed by the arbitrators and paid in accordance with
their determination.
7.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and shall not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement shall be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
7.12 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
shall remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree shall remain in full force and
effect to the extent not held invalid or unenforceable.
7.13 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original copy of this Agreement and all of which,
when taken together, shall be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
G+G RETAIL, INC.
By: /s/ Jay Galin
-------------------------------
Name: Jay Galin
Title: Chairman and Chief Executive
Officer
/s/ Scott Galin
----------------------------------
Scott Galin
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