Exhibit 10.4
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“Agreement”) is made between Endeavor Acquisition Corp.
(“Company”), a Delaware corporation, AAI Acquisition
Corp., a wholly owned subsidiary of the Company (“Merger
Sub”), and Dov Charney (the “Executive”) and is
being entered into concurrently with the closing of the merger and
related business combination transactions (collectively, the
“Acquisition”) prescribed by the Agreement and Plan of
Reorganization (“Reorganization Agreement”) entered
into as of December 18, 2006, by and among the Company, Merger
Sub, American Apparel, Inc., a California corporation
(“AAI”), the various Canadian companies defined in the
Reorganization Agreement as CI, American Apparel, LLC, a California
limited liability company (“AALLC” and, collectively
with AAI and CI, the “Target Companies”), and all of
the stockholders or members of the Target Companies, which include
the Executive. Capitalized terms not otherwise defined herein shall
have the meanings assigned to them in the Merger
Agreement.
RECITALS
WHEREAS, the Company desires to be
assured of the association and services of Executive;
and
WHEREAS, Executive is willing and
desires to be employed by the Company, and the Company is willing
to employ Executive, upon the terms, covenants and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of
the mutual terms, covenants and conditions hereinafter set forth,
the parties hereto agree as follows:
1. Employment . The
Company hereby employs Executive, and Executive hereby accepts such
employment, effective as of the Effective Date, upon the mutual
terms, covenants and conditions set forth herein.
2. Term .
2.1 Initial Term . The
initial term of this Agreement shall be for a period of three
(3) years commencing on the Effective Date hereof, unless
terminated earlier pursuant to Section 7 hereof; provided,
however, that Executive’s obligations in Section 6
hereof shall continue in effect after such termination.
2.2 Additional Terms . This
Agreement shall be renewed for successive periods of one
(1) year unless either party shall give notice of non-renewal,
within sixty (60) days of the expiration of the initial
three-year term or any such one-year renewal term.
3. Duties . Executive
shall serve as Chief Executive Officer and President of each of the
Company, Merger Sub and the CI companies with such duties and
responsibilities as may from time to time be assigned to Executive
by the Board of Directors of the Company, Merger Sub or the CI
companies (in any case, the “Board”),
commensurate with Executive’s title and
position described in this sentence. The duties and services to be
performed by Executive under this Agreement are collectively
referred to herein as the “Services”. Executive shall
report directly to the Board. Executive agrees that he shall at all
times conscientiously perform all of the duties and obligations
assigned to him under the terms of this Agreement to the best of
his ability and experience and in compliance with law. Executive
shall perform his duties out of the Company’s Los Angeles,
California office (as same may be relocated in the same
metropolitan area from time to time) or at such other location as
shall be agreed to by the Company and Executive; provided, that,
Executive’s duties will include reasonable travel in the
United States and abroad, including but not limited to travel to
the Company’s domestic and foreign showrooms and offices of
Company and its subsidiaries and affiliates as is reasonably
necessary and appropriate to the performance of Executive’s
duties hereunder. Executive will comply with and be bound by
Company’s operating policies, procedures, and practices from
time to time in effect during Executive’s
employment.
4. Exclusive Service .
Executive agrees to use his best efforts to promote the interests
of the Company and to devote his full business time and energies to
the business and affairs of the Company and the performance of his
duties hereunder. Executive may, however, engage in civic and
not-for-profit activities for which no compensation (other than
reimbursement of his actual expenses incurred in performance of
such activities) is paid to him, so long as such activities do not
materially interfere with the performance of his duties to the
Company or directly conflict with the Company’s business
interests.
5. Compensation and
Benefits.
5.1 Salary . During the term
of this Agreement, Company shall pay Executive an initial salary of
$1 per annum.
5.2 Benefits . Executive will
be eligible to participate (at Company’s cost) in
Company’s employee benefit plans of general application as
they may exist from time to time, including without limitation
those plans covering pension and profit sharing, executive bonuses,
stock purchases, stock options, and those plans covering life,
health, and dental insurance in accordance with the rules
established for individual participation in any such plan and
applicable law. Executive will receive such other benefits,
including vacation, holidays and sick leave, as Company generally
provides to its employees holding similar positions as that of
Executive. The Company reserves the right to change or otherwise
modify, in its sole discretion, the benefits offered herein to
conform to the Company’s general policies as may be changed
from time to time during the term of this Agreement. Executive
shall also be entitled to continue to use the Target
Companies’ residential apartments and vehicles maintained by
the Target Companies for use by its executives and other
employees.
5.3 Bonus Suspension .
Executive shall not be eligible to earn a bonus during the first
three years following execution of this Agreement.
2
5.4 Expenses . Company will
reimburse Executive for all reasonable and necessary expenses
incurred by Executive in connection with Company’s business,
provided that such expenses are deductible to Company, are in
accordance with Company’s applicable policy and are properly
documented and accounted for in accordance with the requirements of
the Internal Revenue Service.
6. Confidentiality and
Proprietary Rights .
6.1 Confidentiality .
Executive acknowledges that as a result of his employment with the
Company and his prior employment with the Target Companies,
Executive has obtained and will obtain secret and confidential
information concerning the business of the Company, the Target
Companies and their subsidiaries and affiliates (all of such
entities referred to collectively in this Section, as the
“Company”). Other than in the performance of his duties
hereunder, Executive agrees not to disclose, either during the Term
of his employment with the Company or at any time thereafter, to
any person, firm or corporation any confidential information
concerning the Company which is not in the public domain
inc
