EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated January 31, 1998 by and between Ithaca
Industries, Inc. (the "Company") and Richard P. Thrush (the "Executive").
WHEREAS, the Company desires to employ Executive and to enter into an
agreement embodying the terms of such employment;
WHEREAS, Executive desires to accept such employment and enter into
such an agreement;
WHEREAS, the Company considers it essential to its best interests and
the best interests of its stockholders to foster the continued employment of
Executive by the Company during the term of this agreement; and
WHEREAS, Executive is willing to accept and continue his employment on
the terms hereinafter set forth in this agreement (the "Agreement");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment. Subject to the provisions of Section 9 of this
Agreement, Executive shall be employed by the Company for a period commencing on
February 9, 1998 (the "Effective Date") and ending on February 8, 2000 (the
"Employment Term"). The Employment Term shall be automatically extended for
successive one year periods unless the Company provides the Executive with
written notice, in accordance with Section 9(e) hereof, at least 30 days prior
to
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the end of the Employment Term that it does not wish to extend the Employment
Term. If the Company elects not to extend the Employment Term, the Executive
shall be entitled to terminate his employment as of the end of the Employment
Term and such termination shall be treated as the Executive were terminated
without Cause on the last day of the Employment Term.
2. Position.
(a) Executive shall serve as the Company's Senior Vice
President of Finance and Administration, Secretary and Chief Financial Officer.
In such position, Executive shall have such duties and authority as shall be
determined from time to time by the Board of Directors of the Company (the
"Board") and the Chief Executive Officer of the Company and the Executive shall
report directly to the Chief Executive Officer.
(b) During the Employment Term, Executive will devote
substantially all of his business time and best efforts to the performance of
his duties hereunder and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict with the rendition
of such services either directly or indirectly, without the prior written
consent of the Board.
(c) Executive shall be based at the Company's offices in
Wilkesboro, North Carolina and will live within a one-hour (approximately 40
mile) radius of such office.
3. Base Salary. During the Employment Term, the Company shall pay
Executive a base salary (the "Base Salary") at the annual rate of $250,000,
payable in regular bi-monthly installments in accordance with the Company's
usual
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payment practices. Executive shall be entitled to such increases in his Base
Salary, if any, as may be determined from time to time in the sole discretion of
the Board.
4. Bonus. With respect to each fiscal year during the Employment Term,
Executive shall be eligible to earn an annual bonus award of up to fifty percent
(50%) of the Executive's Base Salary. The amount of the bonus, if any, awarded
to Executive in any year (the "Bonus"), shall be based upon the achievement of
annual performance targets established by the Executive and the Chief Executive
Officer within the first three months of each fiscal year during the Employment
Term.
5. Equity Arrangements. You will be granted stock options for 85,000
shares of common stock under the Ithaca Industries, Inc. 1996 Long Term Stock
Incentive Plan which terms shall be set forth in an individual award agreement,
substantially in the form set forth on Exhibit I hereto.
6. Employee Benefits. During the Employment Term, Executive shall be
provided employee benefits, including but not limited to health insurance, short
term and long term disability insurance and participation in the Company's
401(k) Plan (collectively "Employee Benefits") on the same basis as those
benefits are generally made available to other senior executives of the Company.
Executive shall be provided with four weeks of paid vacation per year.
7. Business Expenses and Perquisites. During the Employment Term,
reasonable business expenses incurred by Executive in the performance of his
duties hereunder and submitted to the Company in writing shall be reimbursed by
the Company in accordance with Company policies. During the Employment Term, the
Executive shall be entitled to full time use of an automobile provided by the
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Company, at the Company's expense, and shall be reimbursed for all reasonable
expenses in connection with the use or operation of such automobile.
8. Moving Expenses. The Company agrees to reimburse Executive for all
reasonable costs and expenses incurred in connection with Executive's relocation
to Wilkesboro, including the cost of a reasonable number of house-hunting trips
for Executive and his spouse. In addition, the Company will reimburse Executive
for reasonable brokerage fees in connection with the sale of his current
principal residence and will pay the Executive an additional amount equal to two
weeks' Base Salary for incidental moving expenses. All amounts payable under
this Section 8 will be net of all federal, state and local income taxes.
9. Termination. Notwithstanding any other provision of this Agreement:
(a) For Cause by the Company. The Employment Term and
Executive's employment hereunder may be terminated by the Company for "Cause."
For purposes of this Agreement, Cause shall mean (i) Executive's engagement in
misconduct which is materially injurious to the Company or its affiliates, (ii)
Executive's continued failure to substantially perform his duties hereunder,
(iii) Executive's repeated dishonesty in the performance of his duties
hereunder, (iv) Executive's commission of an act or acts constituting any (x)
fraud against, or misappropriation or embezzlement from the Company or any of
its affiliates or (y) crime involving moral turpitude or (v) Executive's breach
of Sections 10 or 11 hereof. If Executive is terminated for Cause, he shall be
entitled to receive his Base Salary through the date of termination. Upon
termination of Executive's employment
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for Cause pursuant to this Section 9(a), the Executive shall have no further
rights to any compensation (including any Bonus) or any other benefits under
this Agreement. All other benefits, if any, due Executive following Executive's
termination of employment pursuant to this Subsection 9(a) shall be determined
in accordance with the plans, policies and practices of the Company.
(b) Disability or Death. The Employment Term and Executive's
employment hereunder shall terminate upon his death and if Executive becomes
disabled, as defined under the Company's long term disability plan, or if there
is no such plan in effect, if the Participant becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) months in any
twelve (12) consecutive month period to perform his duties (such incapacity is
hereinafter referred to as "Disability"). Any question as to the existence of
the Disability of Executive as to which Executive and the Company cannot agree
shall be determined in writing by a qualified independent physician mutually
acceptable to Executive and the Company. If Executive and the Company cannot
agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the
Company and Executive shall be final and conclusive for all purposes of the
Agreement.
Upon termination of Executive's employment hereunder for either
Disability or death, Executive or his estate (as the case may be) shall be
entitled to receive his Base Salary through February 8, 2000 and a pro rata
portion of any Bonus that the Executive would have been entitled to receive
pursuant to Section 4 hereof in
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the year of Executive's termination of employment, payable when such Bonus would
have otherwise been payable had the Executive's employment not terminated,
provided, that the amount such Bonus shall be reduced by the aggregate amount of
any payments received, or to be received, under any death benefit or disability
policies of the Company.
Upon termination of Executives employment due to Disability or death
pursuant to this Section 9(b), Executive shall have no further rights to any
compensation or any other benefits under this Agreement. All other benefits, if
any, due Executive following Executive's termination for Disability or death
shall be determined in accordance with the plans, policies and practices of the
Company.
(c) Without Cause by the Company. The Employment Term and
Executive's employment hereunder may be terminated by the Company without Cause.
If Executive's employment is terminated by the Company without Cause (other than
by reason of Disability or death), Executive shall (i) continue to receive his
Base Salary for one year following such termination of employment (the
"Severance Period"), and (ii) be entitled to continue to participate in the
Company's medical plan or receive substantially comparable benefits ("Continued
Medical Coverage") during the Severance Period, subject to continued compliance
with Sections 10 and 11 hereof, and subject to Section 13(f) hereof. The
Continued Medical Coverage shall be in lieu of coverage otherwise available to
Executive during the Severance Period under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or any other applicable continuation of
coverage laws and such Continued Medical Coverage shall be contingent on the
execution by Executive and
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Executive's spouse of any waivers of COBRA that the Company may reasonably
request. Upon termination of Executive's employment by the Company without Cause
pursuant to this Section 9(c), Executive shall have no further rights to any
compensation or any other benefits under this Agreement. All other benefits, if
any, due Executive following Executive's termination of employment by the
Company without Cause shall be determined in accordance with the plans, policies
and practices of the Company.
(d) Termination by Executive. The Employment Term and
Executive's employment hereunder may be terminated by Executive for any reason.
Such termination shall be treated for all purposes as a termination for Cause
pursuant to Section 9(a) and the provisions of Section 9(a) shall apply to such
termination.
(e) Notice of Termination. Any purported termination of
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 13(h)
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of employment under the provision so
indicated.
10. Non-Competition. (a) Executive acknowledges and recognizes the
highly competitive nature of the businesses of the Company and its affiliates
and accordingly agrees as follows:
(i) During the Employment Term and until the later of (i) one
year following the date the Executive ceases to be employed by the
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Company and (ii) the expiration of the Severance Period (the
"Restricted Period"), the Executive will not directly or indirectly,
(i) engage in any business for the Executive's own account which is
principally engaged in the hosiery or underwear business or any other
business which competes with the business of the Company or any
affiliate of the Company (the "Company Affiliates"), (ii) enter the
employ of, or render any services to, any person who is principally
engaged in the hosiery or underwear business or any other business
which competes with the business of the Company or the Company
Affiliates (the "Competitive Businesses"), (iii) acquire a financial
interest in, or otherwise become actively involved with, any person who
is principally engaged in any Competitive Businesses, directly or
indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant, or (iv) interfere with
business relationships (whether formed before or after the date of this
Agreement) between the Company and customers or suppliers of the
Company or the Company Affiliates.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Executive may, directly or indirectly own, solely as an
investment, securities of any person engaged in the Competitive
Businesses which are publicly traded on a national or regional stock
exchange or on the over-the-counter market if the Executive (i) is not
a controlling person of, or a member of a group which controls, such
person and (ii) does not, directly or indirectly, own 1% or more of any
class of securities of such person.
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(iii) During the Restricted Period, the Executive will not,
directly or indirectly, (i) solicit or encourage any employee of the
Company or the Company Affiliates to leave the employment of the
Company or the Company Affiliates, or (ii) hire any such employee who
has left the employment of the Company or the Company Affiliates (other
than as a result of the termination of such employment by the Company
or the Company Affiliates) within one year after the termination of
such employee's employment with the Company or the Company Affiliates.
(iv) During the Restricted Period, the Executive will not,
directly or indirectly, solicit or encourage to cease to work with the
Company or the Company Affiliates any consultant then under contract
with the Company or the Company Affiliates.
(b) It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this Section 10
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable,
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such finding shall not affect the enforceability of any of the other
restrictions contained herein.
11. Confidentiality. Executive will not at any time (whether during or
after his employment with the Company) disclose or use for his own benefit or
purposes or the benefit or purposes of any other person, firm, partnership,
joint venture, association, corporation or other business organization, entity
or enterprise other than the Company and any of its subsidiaries or affiliates,
any trade secrets, information, data, or other confidential information relating
to customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company, provided that the foregoing
shall not apply to information which is not unique to the Company or which is
generally known to the industry or the public other than as a result of
Executive's breach of this covenant. Executive agrees that upon termination of
his employment with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company and its affiliates, except that he may retain personal notes,
notebooks and diaries. Executive further agrees that he will not retain or use
for his account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of the
Company or its affiliates.
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12. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 10 or Section 11 would be inadequate and, in recognition
of this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
(b) Entire Agreement/Amendments. This Agreement contains the
entire understanding of the parties with respect to the employment of Executive
by the Company. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject matter
herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto.
(c) No Waiver. 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 of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
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(d) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a company which is a
successor in interest to substantially all of the business operations of the
Company. Such assignment shall become effective when the Company notifies the
Executive of such assignment or at such later date as may be specified in such
notice. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such successor company,
provided that any assignee expressly assumes the obligations, rights and
privileges of this Agreement.
(f) Mitigation. Executive shall be required to mitigate the
amount of any payment provided for pursuant to this Agreement during the second
six months of the Severance Period by seeking other employment, taking into
account the provisions of Section 10 of this Agreement. Anything in this
Agreement to the contrary notwithstanding, in the event that Executive provides
services for pay to anyone other than the Company or any of its affiliates or
subsidiaries from the date Executive's employment hereunder is terminated until
the end of the Severance Period, the amounts paid to Executive during the second
six months of the Severance Period pursuant to this Agreement shall be reduced
by the amounts of salary, bonus or other cash compensation earned by Executive
during such period as a result of Executive's performing such services,
provided, however, that if Executive becomes
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employed by another employer at any time during the Severance Period and becomes
covered under such new employer's medical plan, the Executive shall immediately
inform the Company and the Continued Medical Coverage shall immediately cease
and the Company will have no further obligation to provide the Continued Medical
Coverage.
(g) Successors; Binding Agreement. This Agreement shall inure
to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributes, devises and legatees.
(h) Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the execution page of this Agreement, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
(i) Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.
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(j) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Richard P. Thrush
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Richard P. Thrush
2105 Graywalsh Drive
Wilmington, NC 28405
ITHACA INDUSTRIES, INC.
By: /s/ Jim D. Waller
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Title: President
Highway 268 W.
P.O. Box 620
Wilkesboro, NC 28597