Document:

exhibit101.htm

    

    

    Employment
      Agreement

    

    Between

    

    Polo
      Expressversand Gesellschaft fur Motorradbekleidung und

    Sportswear
      mbH,

    business
      address Reisholzer Werftstrasse 76, 40589 Dusseldorf

    

    -legally
      represented by its shareholders -­

    

    (the
      "Company")

    

    and

    

    Mr.
      Klaus
      Esser

     Residing
      at Unterwestrich 12,41812 Erkelenz

    

    

    

    Recitals

    

    A           WHEREAS,
      Mr. Esser has been managing director of the Company and its
      predecessors

    

    B           WHEREAS,
      the present employment agreement ("the Employment Agreement") between the
      Company and Mr. Esser dates as of October 18, 2005.

    

    C.           WHEREAS,
      Mr. Esser, as managing director and minority shareholder of the Company, Hein
      Gericke Deutschland GmbH as major shareholder of Company and The Fairchild
      Corporation ("Fairchild"), which is the indirect major shareholder of the
      Company, have reached an agreement about amendments to Mr. Esser's Employment
      Agreement.

    

    Now,
      therefore, the parties hereto restate and amend their agreement as follows
      to
      take effect for the financial year commencing October 1, 2006:

    

    §
      1 Position

    

    1.1           Mr.
      Esser shall continue to be the managing director of the Company. Mr. Esser's
      scope of work is the management of the business activities of the Company.
      Mr.
      Esser will be the Senior Operational Officer / President of the Company
      ("Vorsitzender der Geschaftsleitung") with the power to represent the Company
      alone ("einzelvertretungsberechtiger Geschaftsfuhrer"). Mr. Esser shall have
      full and exclusive day to day operational discretion regarding the ordinary
      course of business activities of the Company. Nothing herein shall restrict
      the
      appointment of additional general managers (Geschaftsfuhrer) for the
      Company.

    

    1.2           Mr.
      Esser shall devote his efforts and all his professional knowledge and experience
      to the above mentioned duties, exclusively.

    

    §2
      Duration

    

    2.1           This
      Agreement commenced on 01 January 2006 and is made for an initial term of 7
      years, ending on December 31, 2012 (the "Initial Term"). The Agreement is
      automatically renewed for an indefinite period of time, unless terminated by
      either party with nine (9) months' notice prior to the end of the Initial Term,
      and may thereafter be terminated by either party with one year's notice for
      the
      end of a calendar quarter.

    

    2.2           Any
      notice of termination must be in writing.

    

    2.3           The
      Company's and Mr. Esser's right to give extraordinary notice for cause remains
      unaffected.

    

    §3

    Remuneration

    

    3.1           Mr.
      Esser shall receive an annual gross salary of €300,000 (the "Fixed Salary") to
      be paid in twelve equal installments at the end of each calendar month. In
      case
      a contract year is shorter than the calendar year, the Fixed Salary shall be
      paid pro rata temporis.

    

    The
      Fixed
      salary shall compensate for all services required under this Agreement,
      including overtime, if any.

    

    3.2           In
      addition the Company shall contribute an amount to the health and to the pension
      insurance of Mr. Esser equal to the statutory employer's share based on the
      contribution ceiling.

    

    3.3           Mr.
      Esser shall further receive a bonus amounting to the following (the "Bonus
      Amount"), based on the EBITDA of the Company as defined in Section 3.3.2 below
      for each fiscal year:

    

    (a)           For
      fiscal years ending until September 30. 2008

    

    
      	
               

            	
              (i)

            	
              For
                an EBITDA that is less than € 5 Million, the Bonus Amount shall be
                0%.

            

    

    

    
      	
               

            	
              (ii)

            	
              For
                an EBITDA that is € 5 Million or more, the Bonus Amount shall be 5 % of
                the total EBITDA.

            

    

    

    Examples:

    

    If
      the
      EBITDA of the fiscal year ending on September 30, 2008 is 9,0 €
Million, the Bonus Amount shall be €450,000.00 (jour hundred and fifty
      thousand Euros).

    

    If
      the
      EBITDA of the fiscal year ending on September 30, 2008 is € 4,6 Million, the
      Bonus Amount shall be zero.

    

    (b)           For
      the fiscal year ending on September 30, 2009

    

    
      	
               

            	
              (i)

            	
              For
                an EBITDA that is less than € 6 Million, the Bonus Amount shall be
                0%.

            

    

    

    
      	
               

            	
              (ii)

            	
              For
                an EBITDA that is € 6 Million or more, the Bonus Amount shall be 6 % of
                the total EBITDA.

            

    

    

    Examples:

    

    If
      the
      EBITDA of the fiscal year ending on September 30, 2009 is 9,0 €
Million, the Bonus Amount shall be € 540,000.00 (five hundred and forty
      thousand Euros) .

    

    If
      the
      EBITDA of the fiscal year ending on September 30, 2009 is € 5,6 Million, the
      Bonus Amount shall be zero.

    

    (c)           For
      the fiscal years ending after September 30, 2009

    

    
      	
               

            	
              (i)

            	
              For
                an EBITDA that is less than € 7 Million. the Bonus Amount shall be
                0%.

            

    

    

    
      	
               

            	
               (ii)

            	
              For
                an EBITDA that is € 7 Million or more, the Bonus Amount shall be 6 % of
                the total EBITDA.

            

    

    

    Examples:

    

    If
      the
      EBITDA of the fiscal year ending on September 30,2010 is 9,0 € Million,
      the

    Bonus
      Amount shall be € 540,000.00 (jive hundred and forty thousand Euros)
      .

    

    If
      the
      EBITDA of the fiscal year ending on September 30, 2010 is € 6,6 Million,
      the

    Bonus
      Amount shall be zero.

    

    3.3.1           The
      Company's fiscal year commences on October I of each calendar year. In cases
      in
      which the employment period is less than a fiscal year, the Bonus Amount shall
      be paid pro rata temporis, but shall be in any case not be less than
      the Bonus Installments as defined in Section 3.4 below.

    

    3.3.2           "EBITDA"
      shall mean earnings before interest, taxes, depreciation and amortization as
      determined pursuant to German HGB without taking into account any future changes
      of the current ownership structure /shareholder structure / legal structure
      of
      the Company. Furthermore, the EBITDA shall be determined by entering the maximum
      legally possible values as an asset of the balance and by setting up the minimum
      legally possible values as debts and accruals of the balance ("aufgrund der
      handelsrechtlich zulassigen Hochstwerte auf der Aktivseite der Bilanz und der
      niedrigsten zulassigen Werte der Verbindlichkeiten und Riickstellungen"). The
      EBITDA shall be further assessed without taking into account the amount of
      this
      bonus as operating expenses.

    

    3.3.3           If
      the Company's business is expanded due to a material infusion of additional
      capital or debt, or if there are material future changes of the current
      ownership structure / shareholder structure /legal structure of
      the Company which will affect EBITDA, the Bonus Amount percentages shall be
      renegotiated.

    

    3.4           Subject
      to the settlement provisions set forth in Section 3.5 below, during the
      employment term the Bonus Amount shall be paid in monthly
      installments

    

    of
€
      35,000 in fiscal year 2006/2007

    of
€
      40.000 in fiscal year 2007/2008

    of
€
      50.000 in fiscal year 200812009

    of
      €60.000 in fiscal year 200912010

    of
€
      70.000 in fiscal year 2010/2011

    of
€
      80.000 in fiscal year 2011/2012

    

    (to
      paid
      at the end of each calendar month) (the "Bonus Installments"). The amount of
      the
      Bonus Installments may be readjusted if, based on the Company's forecasts
      prepared on the basis of the interim accounts of the Company as of April 30
      of
      the respective calendar year, the aggregate Bonus Installments for such fiscal
      year would materially exceed or fall below the Bonus Amount forecasted to be
      paid for such fiscal year based on the forecasts ("Material Difference"); in
      case Mr. Esser and the Company do not agree if a Material Difference exists
      the
      Bonus Installments shall not be readjusted. In any cases in which the Company
      releases Mr. Esser from any further activities for the Company, the Company
      must
      maintain full payment of the monthly installments of Fixed Salary of € 25,000
      and of the Bonus Installment in the amounts described above until the end of
      this agreement (in such cases the regulation of Section 3.5
Sentence 2 (ii) shall not apply), and the Company must
      maintain any other benefits stipulated in this agreement, such as insurances
      (Section 3.2 and Section 10) and company car (Section 5), this shall also apply
      in the case that the Company releases Mr. Esser from any further activities
      during the Initial Term after December 31, 2007 with the exception that Mr.
      Esser shall receive no monthly Bonus Installment in the case that the EBITDA
      on
      the basis of the Audited Financial Statements (as set forth in Section 3.5
      below) for fiscal year ended September 30, 2007 is under € 5
      million.

    

    3.5           The
      exact Bonus Amount shall be determined at the end of each fiscal year, after
      preparation and final approval of the statutory financial statements of the
      Company, audited by the outside auditors of the Company (the "Audited Financial
      Statements"). Settlement of the Bonus Amount shall be made within thirty (30)
      days after the Audited Financial Statement have been finalized, in any case
      not
      later than twelve (12) months after the end of each fiscal year. Settlement
      shall be as follows: (i) if the Bonus Amount for such fiscal year is greater
      than the aggregate Bonus Installments paid to Mr. Esser for such fiscal year,
      the Company shall pay the difference to Mr. Esser; or (ii) if the Bonus Amount
      for such fiscal year is less than the aggregate Bonus Installments paid to
      Mr.
      Esser for such fiscal year, Mr. Esser shall pay back the difference to the
      Company. Mr. Esser is entitled to the right of inspection of the annual
      financial statements of the Company and to determine their accuracy pursuant
      to
      Paragraph 51 a German law on limited liability companies (GmbH). For
      clarification the parties state that this Section shall survive termination
      of
      this Agreement.

    

    §4

    Holiday

    

    Mr.
      Esser
      is entitled to an annual holiday of 30 working days which is based on a work
      week from Monday to Friday.

    

    §5

    Company
      Car

    The
      company will provide Mr. Esser with a company car (Audi A8 or similar). The
      company car may also be used privately. Mr. Esser shall bear the salary tax
      for
      such private use.

    

    §6

    Confidentiality

    During
      the period of employment with the Company and at any time thereafter, Mr. Esser
      shall keep strictly secret all confidential information concerning the Company
      and will not utilize such information for his own or for the benefit of others.
      For clarification the parties state that this Section shall survive termination
      of this Agreement.

    

    §7

    Return
      of Documents and other Records

    

    Upon
      termination of the employment with the Company or upon any discharge from his
      obligation to render services to the Company Mr. Esser shall promptly return
      to
      the Company (i) all files, documents, correspondence and records, drafts and
      the
      like concerning the business of the Company and its affiliates which are in
      his
      possession or which he has access to as well as

    (ii)
      any
      photocopies or other copies thereof, regardless of whether the same were
      originally furnished by the Company or not. Mr. Esser shall not be entitled
      to
      exert any right of retention with respect to such documents and other records.
      For clarification the parties state that this Section shall survive termination
      of this Agreement.

    

    §8

    Amendments
      And Contract Interpretation

    

    8.1           Any
      amendments of or supplements to this Agreement -including this clause -shall
      only be effective if made in writing.

    

    8.2           Any
      action by the Company under this Agreement (such as enforcement or
      interpretation of the Agreement) shall be exercised by the managing director
      of
      Hein Gericke Deutschland GmbH.

    

    8.3           This
      Agreement shall be signed on behalf of the Company by the managing director
      of
      Hein Gericke Deutschland GmbH.

    

    §9

     Intentionally
      left blank

    

    

    §10

    Insurance

    

    The
      Company will include Mr. Esser in the director and officer liability insurance
      policy maintained for the Company by the US parent company which is The
      Fairchild Corporation, as long as Fairchild is a indirect shareholder of the
      Company, or another adequate insurance policy if this should become
      necessary.

    

    §11

    Assignment

    

    This
      Agreement may be assigned by the Company to another wholly-owned German company
      of the Company subject to Mr. Esser's consent which may not be unreasonably
      withheld.

    

    §12

    Non-Competition
      until December 31, 2008

    

    12.1           During
      his term of employment with the Company, and during the Applicable Period (as
      defined in Section 12.2 below), Mr. Esser will ensure that neither he nor any
      company which he controls shall carryon any activity that would be in
      competition with any activity of the Company or its successors related to or
      in
      connection with design, manufacture, distribution and/or sales of clothing
      for
      motorcyclists, helmets and technical accessories for motorbikes and related
      products ("Relevant Business"), including, but not limited to soliciting,
      enticing away or seeking to entice away existing customers of the Company in
      Germany and shall not be interested in any enterprise (or the business results
      of any enterprise) which competes with any activity of the Company related
      to or
      in connection with the Relevant Business in Germany. Excepted from the foregoing
      are investments in publicly traded companies in which Mr. Esser is not an
      officer, director or employee, provided that such investments are not in excess
      of 3% of the publicly traded company's issued stock.

    

    12.2           As
      used herein, the "Applicable Period" means a period of twenty four (24) months
      following termination of employment. During the Applicable Period, the Company
      shall compensate Mr. Esser at the rate specified below (payable monthly, at
      the
      end of each calendar month). The Company may elect not to have the Applicable
      Period come into effect by so notifying Mr. Esser in writing within twenty-eight
      (28) days from the date of the notice of termination of employment; in this
      case
      the compensation for Mr. Esser for the covenants under Section 12.1 shall be
      a
      fixed amount of € 30.000 per month to be paid at the end of each calendar month
      for the period provided by Paragraph 75 a German Commercial Code.

    

    If
      the
      Applicable Period comes into effect, for the duration of the Applicable Period
      the Company shall compensate Mr. Esser (in monthly installments), for the
      covenants under Section 12.1, at a per annum rate of fifty per cent (50 %)
      of
      Mr. Esser's Average Compensation. Mr. Esser's "Average Compensation" shall
      be
      the average yearly remuneration (bonuses included) during the last three years
      of his employment with the Company; for purposes of this agreement, the
      remuneration paid to Mr. Esser under his Service Agreement shall be deemed
      part
      of the average yearly remuneration. The provisions of Paragraph 74 c German
      Commercial Code shall not apply.

    

    12.3           During
      the period of employment and for a period of four (4) years thereafter, Mr.
      Esser shall ensure that neither he nor any company which he controls, directly
      or indirectly offer employment to, or endeavor to entice away employees or
      shop
      partners of the Company except unilateral offers to work for Mr. Esser in a
      business other than the Relevant Business by such individuals without any
      initiative on the part of Mr. Esser, or encourage employees or shop-partners
      to
      leave the Company.

    

    12.4           For
      each case of a breach by Mr. Esser of his obligations under Section 12.1 and/or
      Sections 12.3, the Company shall be, without limitation, entitled
      to:

    

    (i)           demand
      specific performance of Section 12;

    

    
      	
               

            	
              (ii)

            	
              recover
                damages and costs to the Company from Mr. Esser for a breach of
                Section 12;

            

    

    

    
      	
               

            	
              (iii)

            	
              request
                injunctions from an appropriate from an appropriate court to enforce
                Section 12;

            

    

    

    
      	
               

            	
              (iv)

            	
              assert
                any other claims or rights it may have against Mr. Esser in the event
                of
                breach of Section 12.

            

    

    

    12.5           As
      used in this Section 12, the Company includes its successors or
      assigns.

    

    12.6           Mr.
      Esser’s obligation under this Section 12 are in addition to, and not in lieu of,
      any surviving obligations he may have under Section 8 of the Share Purchase
      Agreement (Notarial deed No. 1427/2003) dated October 11, 2003 between Mr.
      Esser
      and Fairchild Textil GmbH (now known as Hein Gericke Deutschland
      GmbH).]

    

    12.7           Should
      any provision of this Section 12 be held wholly or in part invalid or
      unenforceable, or if this Section 12 should contain a gap, the validity and
      enforceability of the other parts shall not be affected thereby.  The
      invalid or unenforceable provision shall be deemed replaced by such valid and
      enforceable provision which corresponds best to the economic interests of the
      parties originally pursued by the invalid or unenforceable
      provision.  The above shall apply mutatis mutandis in case of
      an incomplete provision.

    

    12.8           For
      clarification the parties state that this Section shall survive termination
      of
      this Agreement.

    

    §13

    Non-Competition
      starting January 1,2009

    

    13.1           During
      his term of employment with the Company, and during the Applicable Period (as
      /
      defined in Section 13.2 below), Mr. Esser will ensure that neither he nor any
      company which he controls shall carry on any activity that would be in
      competition with any activity of the Company or its successors related to or
      in
      connection with design, manufacture, distribution and/or sales of clothing
      for
      motorcyclists, helmets and technical accessories for motorbikes and related
      products ("Relevant Business"), including, but not limited to soliciting,
      enticing away or seeking to entice away existing customers of the Company in
      Germany or any other territory in which the Company, directly or indirectly,
      is
      active, and shall not be interested in any enterprise (or the business results
      of any enterprise) which competes with any activity of the Company related
      to or
      in connection with the Relevant Business in Germany or any other territory
      in
      which the Company, directly or indirectly, is active. Excepted from the
      foregoing are investments in publicly traded companies in which Mr. Esser is
      not
      an officer, director or employee, provided that such investments are not in
      excess of 3% of the publicly traded company's issued stock.

    

    13.2           As
      used herein, the "Applicable Period" means a period of twenty four (24) months
      following termination of employment. During the Applicable Period, the Company
      shall compensate Mr. Esser at the rate specified below (payable monthly, at
      the
      end of each calendar month).

    For
      the
      duration of the Applicable Period the Company shall compensate Mr. Esser (in
      monthly installments), for the covenants under Section 13.1, at a per annum
      rate
      of fifty per cent (50 %) of Mr. Esser's Average Compensation. Mr. Esser's
      "Average Compensation" shall be the average yearly remuneration (bonuses
      included) during the last three years of his employment with the Company; for
      purposes of this agreement, the remuneration paid to Mr. Esser under his Service
      Agreement shall be deemed part of the average yearly remuneration. The
      provisions of Paragraph 74 c German Commercial Code shall not
      apply.

    

    13.3           During
      the period of employment and for a period of four (4) years thereafter, Mr.
      Esser shall ensure that neither he nor any company which he controls, directly
      or indirectly offer employment to, or endeavor to entice away employees or
      shop
      partners of the Company except unilateral offers to work for Mr. Esser in a
      business other than the Relevant Business by such individuals without any
      initiative on the part of Mr. Esser, or encourage employees or shop-partners
      to
      leave the Company.

    

    13.4           For
      each case of a breach by Mr. Esser of his obligations under Section 13.I and/or
      Section 13.3, the Company shall be, without limitation, entitled
      to:

    

    (i)           demand
      specific performance of Section 13;

    

    (ii)           recover
      damages and costs to the Company from Mr. Esser for breach of
      Section 13;

    

    (iii)           request
      injunctions from an appropriate court to enforce Section 13;

    

    
      	
               

            	
              (iv)

            	
              assert
                any other claims or rights it may have against Mr. Esser in the event
                of
                breach of Section 13.

            

    

    

    13.5           As
      used in this Section 13, the Company includes its successors or
      assigns.

    

    13.6           Mr.
      Esser's obligations under this Section 13 are in addition to, and not in lieu
      of, any surviving obligations he may have under Section 8 of the Share Purchase
      Agreement (Notarial deed No. 1427/2003) dated October 11, 2003 between Mr.
      Esser
      and Fairchild Texil GmbH (now known as Hein Gericke Deutschland
      GmbH).]

    

    13.7           Should
      any provision of this Section 13 be held wholly or in part invalid or
      unenforceable, or if this Section 13 should contain a gap, the validity and
      enforceability of the other parts shall not be affected thereby. The invalid
      or
      unenforceable provision shall be deemed replaced by such valid and enforceable
      provision which corresponds best to the economic interests of the parties
      originally pursued by the invalid or unenforceable provision. The above shall
      apply mutatis mutandis in case of an incomplete provision.

    

    13.8           For
      clarification the parties state that this Section shall survive termination
      of
      this Agreement.

    

    §
      14

    Reports

    

    14.1           Mr.
      Esser sees to it that the Company provides to its shareholders the necessary
      written reports on the Company's results and forecasts on a monthly and / or
      quarterly basis. Details of such reports shall be set forth in a separate
      document. If relevant, such reports shall contain such details as shall be
      necessary for shareholder's (including indirect shareholder's, such as
      Fairchild) reporting purposes under applicable SEC and, if relevant, similar
      reporting purposes. Furthermore, Mr. Esser sees to it that the Company presents
      to its shareholders annually a long term business and strategy plan for the
      Company ("Business Plan") or an amendment to the seven years
      Business Plan, presented to the shareholders (including Fairchild as indirect
      shareholder) in March 2007 and approved by the shareholders including Fairchild,
      if necessary. If the shareholders do so demand, the above reports will be
      presented to shareholders of the shareholders, for example to Fairchild as
      long
      as Fairchild is (indirect) shareholder of the Company.

    

    14.2           The
      Company's management team will report directly to Mr. Esser, If requested by
      the
      shareholders Mr. Esser will make himself available for consultation with
      shareholders, and, if needed, he will be accompanied in such consultations
      by
      team members, if the shareholders do so request. The last sentence of Section
      14, I shall apply mutatis mutandis,

    

    §
      15

    Attorneys'
      Fees

    

    It
      is
      agreed that each party hereto shall pay his or its own attorneys' fees in
      connection with this Employment Agreement.

    

    In
      witness whereof the parties have executed this Agreement:

    

    ESSER:

    

    /s/
      KLAUS ESSER

    

    Mr.
      Klaus
      Esser

    

    Date:  May,
      30th
      2007

    

    COMPANY:

    

    Polo
      Expressversand Gesellschaft fur Motorradbekleidung und Sportswear
      mbH

    

    By:
      Hein
      Gericke Deutschland GmbH and Mr. Klaus Esser (as a shareholder)

    

    /s/    JOHN
      L.
      FLYNN                                                                                     /s/  KLAUS
      ESSER

    

    By:  John
      L.
      Flynn                                                                                                
Klaus Esser

            Power
      of Attorney

            With
      the Power to Represent Alone is Enclosed

    

    Date:  May
      30th,
      2007

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Power
      of Attorney

    

    The
      undersigned, Hein Gericke Deutschland, GmbH ("HGD"), represented by Eric I.
      Steiner, General Manager, hereby appoints John L. Flynn as
      its/their true and lawful attorney on its/their behalf: (i) to negotiate,
      execute and deliver (on behalf of HGD), an Employment Agreement between Polo
      Expressversand Gesellschaft fur Motorradbekleidung und Sportswear mbH
("Polo GmbH") and Mr. Klaus Esser; and (ii) to take any
      other action of any type whatsoever in connection with the foregoing which,
      in
      the opinion of such attorney-in-fact, may be of benefit to, in the best interest
      of, or legally required by, the undersigned, it being understood that the
      documents executed by such attorney-in-fact on behalf of the undersigned
      pursuant to this Power of Attorney shall be in such form and shall contain
      such
      terms and conditions as such attorney-in-fact may approve in such
      attorney-in-fact's discretion.

    

    The
      undersigned hereby grants to such attorney-in-fact full power and authority
      to
      do and perform any and every act and thing whatsoever requisite, necessary,
      or
      proper to be done in the exercise of any of his rights and powers herein
      granted, as fully to all intents and purposes as the undersigned might or could
      do if personally present, with full power of substitution or revocation, hereby
      ratifying and confirming all that such attorney-in-fact, or such
      attorney-in-fact's substitute or substitutes, shall lawfully do or cause to
      be
      done by virtue of this power of attorney and the rights and powers herein
      granted.

    

    This
      Power of Attorney shall remain in full force and effect for a period of thirty
      (30) days unless earlier revoked by the undersigned in a signed writing
      delivered to the foregoing attorney-in-fact.

    

    Executed
      this 23 day of May, 2007.

    

    Hein
      Gericke Deutschland GmbH

    Represented
      by Eric I. Steiner, General Manager

    

    /s/
      ERIC I. STEINER<PDF>
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