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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.
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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 including
trade secrets, budgets, strategies, operating plans, marketing
plans, patents, copyrights, supplier lists, company agreements,
employee lists, or the customer lists or similar information of the
Company.
6.2 Proprietary Rights. All records, files, memoranda, reports,
price lists, customer lists, drawings, plans, sketches, documents
and the like (together with all copies thereof) relat
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