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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement dated as of February 1, 1997,
by and between JENNA LANE, INC., a Delaware corporation with offices at 1407
Broadway, Suite 1801, New York, New York 10018 (the "Company") and MITCHELL
DOBIES, residing at 5 Whistler Way, Marlboro, New Jersey 07746 (the
"Executive").
WHEREAS, the Company and the Executive entered into that certain
Employment Agreement, dated as of March 24, 1995, providing for the employment
of the Executive by the Company, which Agreement was amended pursuant to that
certain Amendment to Employment Agreement dated as of March 24, 1995, further
amended pursuant to that certain Amendment to Employment Agreement dated as of
April 10, 1995 and further amended pursuant to that certain Amendment to
Employment Agreement dated as of March 23, 1996 (collectively, the "Employment
Agreement"), initially capitalized terms not otherwise defined herein having
their respective meanings as set forth in the Employment Agreement; and
WHEREAS, the Company and the Executive desire to further amend and
restate in its entirety, as so amended, the Employment Agreement pursuant to the
terms and conditions hereof.
NOW, THEREFORE, the Employment Agreement is hereby amended and restated
in its entirety as follows, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged:
1. Employment and Duties.
(a) The Company hereby employs the Executive, and the Executive
hereby accepts employment by the Company, as President and co-Chief Executive
Officer of the Company, and shall report directly to the Board of Directors of
the Company. As such, Executive shall perform duties and functions and assume
and discharge those responsibilities which are otherwise usually performed by
persons holding his title with the Company and shall perform such other duties
as may be assigned to him from time to time by the Board of Directors.
(b) The Executive shall devote his full time to the business and
affairs of the Company, shall use his best efforts to promote the interests of
the Company and its affiliates, and shall discharge his responsibilities in a
diligent and faithful manner, consistent with sound business practices. The
Executive shall not engage in any other employment or business activity, except
the supervision of his private investments.
(c) The Company agrees that during the term hereof the
Executive's duties shall be such as to allow him to live and work in the New
York City Metropolitan Area, and in no event shall the Executive be required to
move his residence from, or operate outside of, the New York City Metropolitan
Area.
2. Compensation.
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(a) Salary. As payment in full for all services to be rendered by
the Executive during the term hereof, the Company shall pay the Executive, and
the Executive shall accept, an annual salary ("Base Salary") at the rates set
forth below. The Company, acting by its Board of Directors, may, in its sole and
absolute discretion, increase the salary of the Executive during the term
hereof. Such salary shall be payable in equal weekly installments or as
otherwise agreed upon by the Company and the Executive.
Period Base Salary
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2/1/97-3/31/97 $225,000
4/1/97-3/31/98 $250,000
4/1/98-3/31/99 $275,000
4/1/99-3/31/00 $300,000
(b) Fringe Benefits. The Company shall provide the Executive with
perquisites consistent with those provided to other senior executives of the
Company, to the extent so provided, including, without limitation, health
insurance for him and his dependents (or reimburse him for reasonable cost which
he incurs himself with respect thereto), disability, life and accident insurance
(such health insurance, disability, life and accident insurance, collectively,
"Insurance"), pension, profit sharing, stock option, stock bonus or other
employee benefit plans. The Company also shall provide Executive with a monthly
expense allowance (the "Expense Allowance") which Executive shall utilize for
business expenses related to the business of the Company, in amounts as follows:
Period Monthly Expense Allowance
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2/1/97-3/31/97 $3,500
4/1/97-3/31/98 $3,500
4/1/98-3/31/99 $3,834
4/1/99-3/31/00 $4,167
Executive also shall be entitled to and shall receive during the term hereof
such vacation, holiday and similar rights and privileges as are enjoyed
generally by senior executives of the Company as of the date hereof; provided
however that Executive shall be entitled to no less than twenty-five (25)
business days annual vacation. The Company agrees not to reduce or remove any
perquisites, emoluments of office or title or benefits enjoyed by Executive on
the date hereof.
(c) Participation in Bonus Pool. The Board of Directors shall
include Executive in the distribution of an aggregate, to all executives of the
Company who may participate, of twelve and one-half percent (12 1/2%) of the
excess above $1,000,000 of the net income before taxes of the Company for each
fiscal year of the Company during the term hereof (the "Bonus Pool"), payable
once annually at such time as the Board of Directors shall determine, provided,
that in no event shall the amount in the Bonus Pool be less than $100,000 if the
net income before taxes of the Company for such fiscal year has equaled or
exceeded $1,000,000. That portion of the Bonus Pool which shall be payable to
Executive shall be in the sole discretion of the Board of Directors.
Notwithstanding the foregoing, Executive shall receive a minimum annual bonus
equal to $15,000 (the "Minimum Bonus").
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(d) Issuance of Performance Shares. The Company acknowledges
having issued to you 222,857 shares (the "Performance Shares") of Common Stock,
par value $.01 per share, of the Company (the "Common Stock"), taking into
account the 0.9047619 for one stock dividend declared in July 1996. The
Performance Shares, upon issuance, were validly issued and fully paid shares of
Common Stock of the Company, provided, however, that (i) one-half of the
Performance Shares ("One Half") shall be repurchased by the Company for the par
value thereof in the event that the Company does not achieve net income before
taxes ("Net Income") of at least $2.0 million during the period of April 1, 1997
through March 31, 1998 ("1998 Fiscal Year"), provided that (x) only one-half of
such One Half shall be repurchased by the Company in the event that the Company
achieves Net Income for the 1998 Fiscal Year of at least $1.5 million but less
than $1.75 million and (y) only one-quarter of such One Half shall be
repurchased by the Company in the event that the Company achieves Net Income for
the 1998 Fiscal Year of at least $1.75 million but less than $2.0 million, (ii)
One Half shall be repurchased by the Company for the par value thereof in the
event that the Company does not achieve Net Income of at least $2.5 million
during the period of April 1, 1998 through March 31, 1999 ("1999 Fiscal Year"),
provided that (z) only one-half of such One Half shall be repurchased by the
Company in the event that the Company achieves Net Income for the 1999 Fiscal
Year of at least $2 million but less than $2.25 million and (zz) only
one-quarter of such One Half shall be repurchased by the Company in the event
that the Company achieves Net Income for the 1999 Fiscal Year of at least $2.25
million but less than $2.5 million, (iii) all of which Performance Shares shall
be repurchased by the Company for the par value thereof upon termination of
Executive's employment hereunder in the event that Executive's employment shall
terminate prior to March 31, 1998 and shall be terminated by the Company for
Cause or by Executive without Good Reason; and (iv) one-half of which
Performance Shares shall be repurchased by the Company for the par value thereof
upon termination of Executive's employment hereunder in the event that
Executive's employment shall terminate prior to March 31, 1999 and shall be
terminated by the Company for Cause or by Executive without Good Reason. Net
income before taxes, for purposes of the foregoing calculations, will exclude
any tax deduction obtained by the Company solely on account of the issuance of
the Performance Shares and all similar Performance Shares issued to directors
and members of management of the Company. This provision shall survive any
termination of this Agreement.
3. Term of Employment. The term of employment of the Executive
hereunder, which commenced pursuant to the Employment Agreement, shall continue
for the three year period commencing on the date hereof (the "Initial Term"),
provided that this Agreement shall be deemed renewed on a year to year basis
(each a "Renewal Term") on the same terms as shall have been effective at the
end of the Initial Term in the event that neither party gives the other written
notice of its intent to terminate this Agreement at least 60 days prior to the
expiration of the Initial Term or Renewal Term, as the case may be.
4. Termination of Employment.
(a) Termination upon Death, Disability, Good Reason or for Cause.
The Executive's employment shall terminate upon expiration of the Initial Term
or any Renewal Term of this Agreement as provided in Section 3 or upon the death
of the Executive, and may be terminated immediately, by the majority vote of all
members of the Board of Directors of the Company (excluding Executive), if the
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Executive suffers a Disability or in case of Cause, or may be terminated upon 90
days' advance written notice by the Company without Cause, or may be terminated
by the Executive for Good Reason. "Disability" shall mean such physical or
mental disability or incapacity of the Executive as, in the good faith
determination of the Board of Directors, has prevented him from performing
substantially all his duties hereunder during any period of 90 consecutive days
or 120 days in any six-month period. "Cause" shall mean (i) a nonappealable
judicial determination of Executive's malfeasance or dishonesty with respect to
actions related to the Company, (ii) conviction or plea of guilty or no contest
by Executive of (A) any felony or (B) any crime against the Company or (iii)
failure to act upon the express lawful direction of the Board of Directors,
after 15 days' written notice and opportunity to cure such failure, so long as
such direction (x) is to take action within Executive's duties, (y) is neither
unethical or immoral, in the reasonable determination of Executive and (z) does
not purport to require Executive to take actions which relate to day-to-day
management of the Company. "Good Reason" shall mean, (i) after 30 days' written
notice and opportunity to cure, any breach of the terms hereof by the Company,
including without limitation any reduction or removal of any of his duties,
compensation, perquisites, emoluments of office or title or benefits enjoyed by
Executive on the date hereof or (ii) a Change in Control (as hereinafter
defined).
(b) Consequences of Termination for Good Reason or other than for
Cause. In the event of the termination of Executive's employment by the Company
for any reason other than Cause or in the event of termination by Executive for
Good Reason, he shall receive (i) in one lump sum, the balance of all Base
Salary which had accrued through the date of such termination, as well as all
Base Salary remaining yet to be paid until the expiration of the Initial Term or
the then current Renewal Term, as applicable ("Expiration"), provided, that if
such termination occurs after March 31, 1999, then in addition to such Base
Salary, you shall receive an amount equal to an additional one year's Base
Salary, (ii) the Company shall continue to pay Insurance on your behalf through
Expiration, unless you shall become employed, upon which such payments would
cease, (iii) all accrued but unpaid portions of the Expense Allowance, (iv) upon
payment to other executives of the Company, all announced but unpaid Bonus Pool
payments, (v) upon payment to other executives of the Company, a portion of the
Bonus Pool payment next announced and paid, pro-rated based upon the portion of
the fiscal year during which Executive was employed, the portion of the Bonus
Pool to be paid to Executive being no less (adjusted for such proportion of the
fiscal year) than the portion of the previous year's Bonus Pool, (vi) any
reimbursement of business expenses in excess of the Expense Allowance and (vii)
all rights for the Company to repurchase any of the Performance Shares, unless
such right shall have accrued but not been exercised, shall be null and void as
of the date of such termination.
(c) Consequences of Termination without Good Reason or for Cause.
In the event of a termination of the Executive's employment by the Company for
Cause, or in the event of termination by Executive without Good Reason, he shall
receive (i) in one lump sum, the balance of all accrued but unpaid Base Salary
and Expense Allowance, (ii) upon payment to other executives of the Company, all
announced but unpaid Bonus Pool payments and (iii) any reimbursement of business
expenses in excess of the Expense Allowance. Upon such termination, the Company
shall have the right to repurchase Performance Shares, if applicable, pursuant
to Paragraph 2(d) above.
(d) Consequences of Termination after Change in Control.
Notwithstanding the
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foregoing, in the event that Executive's employment with the
Company ceases for any reason within 18 months after a Change in Control, he
shall receive the greater of the amounts described above and a lump sum payment
equal to 299% of the average of all annual compensation (including all Base
Salary, Expense Allowance and the reasonable value of all fringe benefits)
received for the previous five years (or lesser period since the Company was
incorporated). Further, in the event the provisions of this Paragraph 4(d) are
in any manner involved in litigation or arbitration and Executive incurs legal
fees or expenses or must make a contribution to a judgment or a settlement of
the matter, the Company agrees to reimburse him for any and all such
expenditures. Such fees or expenses shall not be reimbursed in the event that
Executive is unsuccessful in such litigation or arbitration.
(e) Definition of Change in Control. As used herein, a "Change in
Control" shall be deemed to have occurred:
(i) if any "person" (as such term is used in Section
13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than Executive, shall have become the beneficial owner,
directly or indirectly, of Common Stock of the Company representing twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding securities, unless more than eighty (80%) of the Board of Directors,
as constituted immediately prior to the date of the Change in Control, decide in
their reasonable discretion that no Change in Control has occurred, Executive
not being allowed to vote on such matter as a Director; provided, that if any
such person shall become the beneficial owner, directly or indirectly, of Common
Stock of the Company representing thirty-three and one third percent (33-1/3%)
or more of the Company's then outstanding securities, a Change in Control shall
ipso facto have occurred,
(ii) if at any time individuals who at the date of this
Agreement constitute a majority of the Board of Directors cease, for any reason
other than death or voluntary resignation (being a resignation not requested by
any other person or persons), to constitute at least a majority of the Board,
provided, that no Change in Control shall be deemed to occur which takes place
prior to, or contemporaneous with, the Company's currently contemplated initial
public offering of securities, and provided, further, that no Change in Control
shall be deemed to have occurred if any change described herein (x) has been
approved by a vote of at least eighty percent (80%) of all the members of the
Board of Directors and (y) such change is part of a transaction pursuant to
which an equity interest in the Company representing at least ten percent (10%)
of the issued and outstanding capital stock of the Company, on a fully diluted
basis, is being sold by the Company to third parties, or
(iii) if there is a Change in Control of a nature that, in
the opinion of counsel for the Company, would be required to be reported in
response to Item 5(f) of Schedule 14A under the Exchange Act, unless
three-quarters of the Board, as constituted immediately prior to the date of the
Change in Control, decide in their reasonable discretion that no Change in
Control has occurred, Executive not being allowed to vote on such matter as a
Director.
(f) "Golden Parachute" Limitation. Notwithstanding anything
contained herein, nothing in Paragraph 4(d) is intended to provide compensation
or severance to Executive in an amount which, in the aggregate with all other
payments in the nature of compensation paid to (or for the benefit of)
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Executive, would require the payment of the excise tax described in Section 4999
of the Internal Revenue Code of 1986, as amended, or any successor to such
Section , and no payments to Executive under Paragraph 4(d) shall be made which
so require the payment of any such excise tax.
5. Non-Competition; Confidentiality; Inventions.
(a) The Executive shall not, at any time during the period of his
employment by the Company or (i) within one (1) year after termination of his
employment, if termination is a result of termination for Cause or is a result
of Executive's termination other than for Good Reason, or (ii) within 90 days
after termination of employment, if termination is a result of the expiration of
the Initial Term or any Renewal Term, termination not for Cause by the Company
or termination by Executive for Good Reason (such period, as applicable, the
"Restriction Period"), in either case directly or indirectly, solicit or permit
any business of which he is an owner, partner, shareholder or executive to
solicit any employee of the Company or any of its affiliates to leave its employ
or join the employ of another, then or at a later time.
(b) The Executive shall not, at any time during the period of his
employment by the Company or during the Restriction Period, in either case
directly or indirectly, engage in or be interested (as owner, member, partner,
shareholder, employee, director, officer, manager, agent, consultant or
otherwise) in any firm or Company which engages in any business which competes,
directly or indirectly, with the business of the Company; provided that the
ownership of two percent or less of a publicly-traded class of securities shall
not be deemed a violation of the foregoing covenant.
(c) The Executive shall not, directly or indirectly, either
during the term of this Agreement or thereafter, disclose to any person, firm or
Company or use (except in the regular course of the Company's business) any
confidential information of any type that he shall have acquired as a result of
his employment with the Company, unless such information has been first
published voluntarily and intentionally by the Company, or unless such
disclosure is required by law. Promptly after termination of his employment
hereunder, the Executive will surrender to the Company any and all lists,
manuals, books and records of or relating to the business of the Company, all
copies of the former, whether in use or not, and all other property belonging to
the Company.
(d) The Executive agrees to make prompt and complete disclosure
of every invention (whether or not patentable), process, product, apparatus,
plan, system or improvement which he conceives or makes, and any patent
application which he files, during the period of his employment by the Company
or during the Restriction Period, which pertain to the Company's present or then
contemplated field of business. The Executive further agrees that every said
invention, process, product, apparatus, plan, system, improvement and filing
which relates to the Company's present or then contemplated field of business
shall be the sole and exclusive property of the Company but without expense to
himself, he will execute any and all proper applications for patents, copyrights
and trademarks, assignments and other instruments which the Company shall deem
necessary or convenient to perfect its title in said property or to otherwise
protect its interest therein in the United States or foreign countries, and
render aid and assistance to the Company in any litigation or other proceeding
pertaining to said property.
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(e) The provisions contained in this Section 5 as to the time
periods, scope of activities, persons or entities affected, and territories
restricted shall be deemed divisible so that, if any provision contained in this
Section is determined to be invalid or unenforceable, such provisions shall be
deemed modified so as to be valid and enforceable to the full extent lawfully
permitted.
(f) The Executive acknowledges that the provisions of this
Section 5 are reasonable and necessary for the protection of the Company and
that the Company will be irrevocably damaged if such covenants are not
specifically enforced. Accordingly, the Executive agrees that the Company will
be entitled to injunctive relief for the purpose of restraining the Executive
from violating such covenants in addition to any other relief to which the
Company may be entitled under this Agreement.
6. Representations and Warranties of Executive. Executive represents
and warrants to the Company that (a) Executive is under no contractual or other
restriction or obligation which is inconsistent with the execution, delivery and
performance under this Agreement or the other rights of the Company hereunder,
and (b) Executive is under no physical or mental disability that would hinder
his performance of duties under this Agreement.
7. Miscellaneous.
(a) This Agreement shall be governed by and be construed in
accordance with the law of the State of Delaware applicable to contracts made
and to be performed in that state.
(b) The Executive may not assign his rights or obligations under
this Agreement, or a participation in such rights and obligations, to any
person.
(c) All notices and other communications under this Agreement
shall be in writing and shall be considered given only when delivered personally
against written receipt therefor, mailed by registered mail (return receipt
requested), or sent by expedited or overnight delivery service with return
receipt, or sent by telecopier with confirmed receipt, to the party to receive
notice at the addresses first set forth above, or such other address as either
party may, upon ten (10) days' written notice, direct.
(d) Each of the parties hereto shall hereafter, at the request of
either party hereto, execute and deliver such further documents and agreements,
and do such further acts and things as may be necessary or expedient to carry
out the provisions of this Agreement.
(e) The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
(f) This Agreement constitutes a complete statement of all of the
arrangements between the parties as of the date hereof with respect to the
matters contemplated hereby, supersedes all prior agreements and understandings
between them, and cannot be changed or terminated orally.
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(g) The headings in this Agreement are intended solely for
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement.
(h) This Agreement shall inure to the benefit of, and be binding
upon, the heirs and personal representatives of the Executive and any successor
to the Company including, but not limited to, any successor by merger or
consolidation to the Company's business and assets.
IN WITNESS WHEREOF, the undersigned have set their hands hereto as
of the date first above written.
JENNA LANE, INC.
By: /s/ Charles Sobel
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Charles Sobel, Co-Chief Executive Officer
/s/ Mitchell Dobies
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MITCHELL DOBIES
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