Exhibit 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS AGREEMENT
is made and entered into
this the 30 th day of May, 2008 (the “
Execution Date ”), by
and between JOE’S JEANS INC. , a Delaware corporation
(the “ Company
”), and MARC B. CROSSMAN (“ Executive ”).
W
I T N E S S E T H:
WHEREAS,
Executive and the Company
deem it to be in their respective best interests to enter into an
agreement providing for the Company’s continued employment of
Executive pursuant to the terms herein stated;
NOW, THEREFORE,
in consideration of the
premises and the mutual promises and agreements contained herein,
it is hereby agreed as follows:
1.
Effective
Date .
Executive’s employment under this Agreement shall be
effective as of the 1 st day of December, 2007 (the
“ Effective Date
”).
2.
Position and
Duties .
(a)
As of the Effective Date,
Executive shall serve as President and Chief Executive Officer for
the “ Term of
Employment ” (as herein defined below). In this
capacity, Executive shall devote substantially all of his business
time, efforts and attention to the performance of his duties,
subject to (b) below. Executive shall have the duties,
responsibilities and authority customarily incident to such offices
and positions and to such other services commensurate with such
positions as may be agreed to by Executive and the Company’s
Board of Directors (the “ Board ”). Executive shall
in his capacity as an employee and officer of the Company be
responsible to and obey the reasonable and lawful directives of the
Board consistent with this Agreement and shall report directly to
the Board.
(b)
Executive shall devote
substantially all of his business time and attention to such
duties, except for sick leave, reasonable vacations, and excused
leaves of absences as more particularly provided herein, provided
that so long as this does not interfere to any substantial extent
with Executive’s duties, Executive may manage his personal
investments, be involved in charitable and professional activities
and serve on for profit boards and advisory committees, provided
that nothing in this Section 2(b) shall override
Executive’s obligations in Section 7 hereof
. It is hereby
acknowledged and agreed that Executive currently serves on the
boards of the following entities: Joe’s Jeans Inc.,
Regent’s Secret Inc. and Woodford Industries Inc.
(c)
Notwithstanding any
provision of this Agreement to the contrary, Executive shall not
cause or (to the extent in Executive’s control) allow Company
to take any of the following actions unless and until such action
has been specifically approved by the Board (in writing or at a
Board meeting):
(i)
Make or commit to make any
individual capital expenditure having a cost in excess of one
hundred thousand dollars ($100,000) or capital expenditures in any
year having an aggregate cost that exceeds five hundred thousand
dollars ($500,000) except as provided in a Budget approved by the
Board;
(ii)
hire or terminate or amend
the terms of employment of any officer of the Company, or any
employee of the Company earning in excess of two hundred and fifty
thousand dollars ($250,000) per year, or enter into any employment
or consulting agreements for a term in excess of 365
days.
(iii)
Execute or enter into any
contract or purchase order (whether for services, for inventory,
supplies or other goods used in Company’s operations or
otherwise, but excluding capital expenditures referred to in
paragraph (a) above) that obligates Company to pay in excess
of two hundred fifty thousand dollars ($250,000) except as provided
in a Budget approved by the Board;
(iv)
Make, or cause or permit
to be made, any change in the marketing strategy or pricing
practices of Company from those previously approved by the Board
that could reasonably be expected to have a material effect on
Company’s revenues or net income for any calendar quarter or
calendar year;
(v)
Acquire the business of
any other entity or individual, whether by purchase of assets,
acquisition of equity securities, merger or otherwise.
3.
Compensation
.
(a)
Base Salary
. The Company shall
pay to Executive during the Term of Employment a rate of not less
than Four Hundred Twenty-Nine Thousand Three Hundred dollars
($429,300) per year, payable in accordance with the Company’s
normal payroll practices, and agrees that such salary shall be
reviewed at least annually, beginning with a review on or around
the first anniversary of the Effective Date; provided however, that
Executive’s Base Salary shall not be decreased at any time
during the Term of Employment. (Executive’s annual
salary, as set forth above or as it may be increased from time to
time as set forth herein, shall be referred to hereinafter as
“ Base Salary
.”)
(b)
Performance
Bonus .
Executive shall be eligible to receive an annual discretionary
bonus (“ Bonus
”), targeted at 50% of Executive’s Base Salary, the
achievement of such Bonus to be based on the satisfaction of
criteria and performance standards as established in advance and
agreed to by Executive and the Compensation Committee of the Board
with respect to each 12 month period under this Agreement;
provided, however, that the Bonus to be paid within 12 months from
the Effective Date of this Agreement shall be based upon subjective
performance criteria at the discretion of the Compensation
Committee of the Board. The Bonus, if any, should be paid no
later than 60 days following the conclusion of such annual 12 month
period.
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(c)
Annual Long Term
Incentive Compensation . Executive shall be eligible to
participate in the Company’s 2004 Stock Incentive Plan
(“ Plan ”) and
that any equity grant shall be subject to the terms and conditions
of the Plan and the applicable award agreement reflecting such
grant. Notwithstanding the forgoing, for each 12 month period
under this Agreement from the Effective Date, Executive shall be
eligible for a grant of restricted common stock or restricted
common stock units with an equivalent fair market value of 100% of
Executive’s then current Base Salary.
(d)
Additional
Payment .
Upon execution of this Agreement, Executive shall be entitled to an
additional payment equal to a pro-rata amount of Executive’s
Base Salary he would have otherwise received between the Execution
Date and the Effective Date of this Agreement.
4.
Benefits During the
Term of Employment .
(a)
Executive shall be
eligible to participate in any life, health and long-term
disability insurance programs, pension and retirement programs,
stock and other equity or non-equity incentive compensation
programs, and other fringe benefit programs made available to
senior executive employees of the Company from time to time
(subject, in the case of life, health and long-term disability
insurance programs, to his qualifying under the terms of the
insurance coverage), at a level commensurate with his position, and
Executive shall be entitled to receive such other fringe benefits
as may be granted to him from time to time by the Company’s
Board of Directors. In addition, Executive shall be entitled
to receive a separate long term disability insurance policy in
addition to the standard one offered to other employees as a fringe
benefit.
(b)
Executive shall be allowed
four weeks of vacation with pay and leaves of absence with pay on
the same basis as other senior executive employees of the
Company.
(c)
The Company shall
reimburse Executive for reasonable business expenses incurred in
performing Executive’s duties and promoting the business of
the Company, including, but not limited to, reasonable
entertainment expenses, travel and lodging expenses, following
presentation of documentation in accordance with the
Company’s business expense reimbursement policies.
(d)
In the event of a
relocation of the primary place of employment by the Company at
less than 50 miles but more than 25 miles from Executive’s
place of employment as of the Effective Date (or such later place
of employment as to which he agrees in writing to relocate), then
the Board shall offer to Executive a relocation package consistent
with relocation packages offered to other executives in similarly
situated positions.
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(e)
The Company shall pay or
reimburse Executive up to two thousand dollars ($2,000) for his
attorney’s legal fees and expenses for review of this
Agreement and related documents.
(f)
The Company shall keep in
effect, throughout the Term of Employment, a $1,000,000 term life
insurance policy for Executive (subject to Executive’s
continued eligibility therefor at a reasonable cost) under which
Executive shall be entitled to designate the beneficiaries. Upon
termination of employment for any reason, Executive shall assume
payment for such policy as of the date of termination.
(g)
The Company shall keep in
effect, throughout the Term of Employment, a disability insurance
policy to cover Executive in the event of a disability, as defined
under such policy or plan (subject to Executive’s continued
eligibility therefor at a reasonable cost) under which Executive
shall be entitled to designate the beneficiaries. Upon
termination of employment for any reason, Executive shall assume
payment for such policy as of the date of termination.
5.
Term; Termination of
Employment .
As used herein, the
phrase “ Term of
Employment ” shall mean the period ending on
November 30, 2009 (the “ Expiration Date ”); provided,
however, that as of (i) the Expiration Date and (ii) if
applicable, the end of any Renewal Period (as defined below), the
Term of Employment shall automatically be extended for additional
two year periods (each a “ Renewal Period ”) unless either
the Company or Executive provides 180 days’ prior written
notice to the contrary. If employment ends as a result of a
notice of nonrenewal by either party, the cessation shall be
treated as a contract expiration for purposes of Sections 5 and 6
and not as a termination without Cause or resignation for Good
Reason; provided, however ,
that in the event of a Change in Control (as defined herein), the
Expiration Date (or if the Company is in any Renewal Period, then
the expiration date of such Renewal Period) shall reset to be the
date which is two years’ following the date that the Change
in Control was consummated. Notwithstanding the foregoing,
the Term of Employment shall expire on the first to occur of the
following:
(a)
Termination by the
Company .
(i)
Notwithstanding anything
to the contrary in this Agreement, whether express or implied, the
Company may, at any time, terminate Executive’s employment
for any or no reason by giving Executive at least 90 days’
advance written notice of the effective date of termination.
Nothing in this section prevents the Company from removing
Executive from service during the period, if any, between notice
and effectiveness.
(ii)
“ Cause ” shall mean:
(I)
conviction of an offense
involving an act of dishonesty, fraud or any other act of moral
turpitude under the provisions of any Federal, State or local laws
or ordinances, or using alcohol, narcotics or illegal drugs to such
an extent that it repeatedly materially adversely affects
Executive’s performance hereunder;
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(II)
substantial and willful
failure to perform specific and lawful written directives of the
Board;
(III)
willful and knowing
violation of any rules or regulations of any governmental or
regulatory body that is materially injurious to the financial
condition of the Company;
(IV)
conviction of or plea of
guilty or nolo contendere to a felony or an act of moral torpitude;
or
(V)
a material breach of the
terms and conditions of this Agreement.
provided , however , that with regard to
subclauses (II) or (V) above, Executive may not be
terminated for Cause unless and until the Board has given him
reasonable written notice of their intended actions and
specifically describing the alleged events, activities or omissions
giving rise thereto and with respect to those events, activities or
omissions for which a cure is possible, 30 days to cure such
breach; and provided further, however, that for purposes of
determining whether any such Cause is present, no act or failure to
act by Executive shall be considered “ willful ” if done or omitted to
be done by Executive in good faith and in the reasonable belief
that such act or omission was in the best interest of the Company
and/or required by applicable law.
(iii)
For purposes of this
Agreement (in particular Section 6), “ Disability ” shall mean that as a
result of Executive’s incapacity due to physical or mental
illness (as determined in good faith by a physician acceptable to
the Company and Executive), (x) Executive shall have been
absent from the full-time performance of his duties with the
Company for 120 consecutive days during any 12 month period or
(y) if a physician acceptable to the Company and Executive
advises the Company that it is likely that Executive will be unable
to return to the full-time performance of his duties for 120
consecutive days during the succeeding 12 month period. In
the event of Disability following the expiration of the 120
consecutive day period set forth in (x) or the determination
by a physician in (y) above, then Company may immediately
terminate Executive’s employment as set forth in
Section 6(a).
(b)
Termination by
Executive .
(i)
Notwithstanding anything
to the contrary in this Agreement, whether express or implied, the
Executive may terminate his employment with the Company at any time
without Good Reason upon at least 30 days’ advance written
notice of his intention to terminate his employment hereunder and
with Good Reason upon at least 90 days’ advanced written
notice of his intention to terminate his employment
hereunder.
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(ii)
“ Good Reason ” shall mean the
occurrence of any of the following events, provided that the
Executive gives written notice of his intent to resign pursuant to
such event within 90 days following such occurrence and provided
that such event is not fully corrected within 30 days following
written notification by Executive to the Company that he intends to
terminate his employment hereunder for one of the reasons set forth
below:
(I)
a material breach by the
Company of any provision of the Employment Agreement including, but
not limited to, the assignment to Executive of any duties
inconsistent with Executive’s position as President and CEO,
the removal of Executive in such positions, a material change in
title of Executive, or a material adverse alteration in the nature
or status of Executive’s responsibilities; provided ,
however,
Executive shall not be entitled to terminate pursuant to this
clause (I) in the event Executive is still serving as the head
of a corporate division with a substantially similar title and
whose operations are substantially similar to the Company’s
operations immediately prior to Executive’s decision to
terminate employment;
(II)
a requirement that he
relocate his primary place of employment by more than 50 miles from
his place of employment as of the Effective Date (or such later
place of employment as to which he agrees in writing to relocate);
or
(III)
a material reduction in
Executive’s then current Base Salary.
Executive must actually terminate his
employment within 30 days following the Company’s failure to
cure the applicable event to be treated as resigning for Good
Reason. Furthermore, for a period of six months following
resignation for Good Reason, Executive shall make himself
reasonably available to the Company and/or its Board for
consultation at a mutually agreeable hourly rate.
6.
Salary and Benefits
Upon Termination .
(a)
Accrued Amounts and
Rights .
In the event of termination of employment, Executive shall receive all regular Base
Salary due up to the date of termination, any accrued but unused
vacation (if and to the extent consistent with the Company’s
policies), any incurred but unreimbursed business expenses, and if
it has not previously been paid to Executive, Executive shall be
paid any Bonus due to Executive for any fiscal year ending prior to
the effective date of such termination, any Bonus for the period in
which termination occurred, prorated for the partial period, any
rights under any benefit or equity plan, program or practice and
his rights to indemnification and directors and officers liability
insurance (the “ Accrued
Amounts and Rights ”). For purposes of this
Section 6, “ Base
Salary ” shall mean Executive’s regular rate of
pay at the time of termination and shall not include bonus or
incentive plans, overtime pay, relocation allowances or the value
of any other benefits for which Executive may be eligible and shall
be before any deferrals. Nothing in this Agreement shall be
construed as giving
6
Executive any
additional rights relating to options other than those described in
this Agreement or the respective grants. Executive’s
right to severance benefits, if any, shall be governed by the terms
of this Agreement. Section 6 provides the sole and
exclusive agreement concerning severance benefits for Executive in
the event of a termination and replaces any and all prior plans,
policies and practices relating to severance pay that may exist now
or may have existed in the past, but does not revise any option or
other equity plans or arrangements.
(b)
Further Effect of
Termination on Board and Officer Positions. If Executive’s
employment ends for any reason, Executive agrees that he will cease
immediately to hold any and all officer or director positions he
then has with the Company or any subsidiary, absent a contrary
direction from the Board (which may include either a request to
continue such service or a direction to cease serving upon notice
without regard to whether his employment has ended), except to the
extent that Executive reasonably and in good faith determines that
ceasing to serve as a director would breach his fiduciary duties to
the Company. Executive hereby irrevocably appoints the
Company to be his attorney to execute any documents and do anything
in his name to effect his ceasing to serve as a director and
officer of the Company and any subsidiary, should he fail to resign
following a request from the Company to do so. A written
notification signed by a director or duly authorized officer of the
Company that any instrument, document or act falls within the
authority conferred by this clause will be conclusive evidence that
it does so.
(c)
Responsibility for
Benefits . The Company will pay the entire cost of
all benefits provided under Sections 6(a) and 6(d)(i) of
this Agreement, solely from its general assets. The benefits
made available by those provisions are
“unfunded.”
(d)
Payment of
Benefits
(i)
In the event
Executive’s employment is (I) terminated by the Company
other than for Cause (and excluding Disability and death) or
(II) terminated by the Executive for Good Reason or
(III) terminated by the Company within 18 months following a
Change in Control (as defined below) and other than for Cause (and
excluding Disability and death) or (IV) the Executive
terminates employment within 18 months following a Change in
Control and for Good Reason, Executive shall receive the following
severance benefits upon his satisfaction of the condition in
subsection (e) hereof and subject to subsection
(g) hereof: an amount equal to 24 months of the
Executive’s prior year’s Base Salary and Bonus
(together with, if the termination is by the Company, a payment of
base salary with respect to the positive difference, if any,
between 60 and the days of advance notice given by the Company),
paid in installments over a 12 month period in accordance with the
regular payroll timing, with payment to begin on the payroll date
next following or coinciding with the date 60 days after employment
ends; provided ,
however , that any amounts
due after December 31, 2008 shall, to the extent permitted by
Section 409A of the Internal Revenue Code of 1986 (the “
Code ”) and after
compliance with subjection (e) hereof and at the election of
the Company, be paid in a single lump sum on the later of the first
business day of January
7
2009 or the 60
th day after employment ends. Notwithstanding the
foregoing, if the Company has the required funds to pay the
benefits under this Section 6(d) in a single lump sum
payment, then the Company shall elect to pay such amount in the
single lump sum payment. If Executive’s employment is
terminated by reason of (III) or (IV) above, then
Executive shall be entitled to a lump sum payment provided that the
conditions above are met.
(ii)
In the event
Executive’s employment is terminated (whether by the Company
or by Executive) as described in subsection (d)(i) above or by
death or Disability, the Executive and his spouse and dependents
shall be entitled to continue to be covered by the Company’s
group medical plan as described in Section 4(a) hereof as
provided under COBRA continuation requirements (if applicable) and
the Company will pay the premiums for such coverage for the shorter
of the first 24 months of such coverage or his period of COBRA
eligibility (whichever is shorter).
(e)
Conditions to Receipt
of Benefits . Upon the occurrence of an event
described in Section 6(d) above, Executive will be
eligible for severance benefits hereunder only if Executive
executes and delivers to the Company a Settlement Agreement and
Release of the Company in a form prepared by the Company, which
will include a general release of known and unknown claims, a
return of Company Property, nondisparagement and a requirement to
cooperate regarding any future litigation, as set forth in
Exhibit 1
attached hereto.
(f)
Termination Events Not
Covered .
Except as specifically set forth in this Agreement, the Company
shall not pay Executive severance benefits under this Agreement
if:
(i)
Executive dies during the
term of his employment;
(ii)
Executive’s
employment is terminated for Cause or Disability, as defined
herein;
(iii)
Executive terminates his
employment with Compan
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