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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of
October 1, 1999, by and between NAUTICA ENTERPRISES INC. (the "Company"), a
Delaware Corporation, and Xxxx Xxxxxxxx (the "Executive").
In consideration of the promises and mutual covenants herein
contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive and the
Executive agrees to serve the Company as the President and Chief Executive
Officer of the Xxxx Xxxxxxxx Company (the "Division") of the Company, and the
Executive agrees to perform in such capacity such duties as may from time to
time be assigned to him by the Company and the senior management of the Company.
The amount of funding and resources allocated to the Division will be in the
sole discretion of the Company.
2. Extent of Services. The Executive shall serve as President and
Chief Executive Officer of the Division and shall have such responsibilities,
duties and authority as are generally associated with the position of President
and Chief Executive Officer and as may from time to time be assigned to the
Executive by the Board of Directors of the Company and/or the CEO. The Executive
agrees to devote his entire business time, best efforts, skills and attention to
fulfilling the performance of his duties and responsibilities hereunder
faithfully and diligently.
3. Term. The term of the Executive's employment heretofore commenced
on September 21, 1998, and except in the case of earlier termination as
hereinafter specifically provided, shall continue until February 28, 2002 (the
"Term"). Following this initial term, this Agreement shall be extended
automatically in three year segments, unless either party gives written notice
of nonextension at least ninety (90) days prior to each Automatic Renewal
Period.
4. Compensation.
(a) Salary. For all services to be rendered by the Executive
hereunder, the Company agrees to pay to the Executive, and the Executive agrees
to accept, a current salary at a rate of $650,000 per the Company's fiscal year
ending February 29, 2000 (the "Salary"). The Salary shall be payable in equal
installments pursuant to the Company's payroll practice as may be in effect from
time to time or in any other manner the Executive and the Company agree.
Effective March 1, 2000, the Salary will be increased to $700,000 per the
Company's fiscal year. Thereafter, each year starting on March 1, the Salary
will be increased in an amount to be determined by the Company from time to time
in its sole discretion, but in no case less than five percent (5%), unless
mutually agreed upon to be less.
(b) Bonus. The Executive shall be entitled to receive an annual
bonus in accordance with the bonus policies of the Company in effect from time
to time for other
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employees of comparable seniority, as determined by the CEO of the Company in
his sole discretion from time to time.
5. Benefits.
(a) The Executive shall, as of the effective date of his
employment with the Company, also be eligible to participate in any and all
group insurance, hospital, major medical and disability benefits or other fringe
benefits of the Company, as established by the Company from time to time for
employees of comparable seniority in accordance with and subject to the
eligibility and other provisions of any such plans or programs. The terms and
conditions of such benefits may be changed from time to time in the Company's
sole discretion.
(b) The Executive shall be entitled to participate in any stock
option, compensation, retirement, pension, welfare or other incentive plans
generally available from time to time to employees of comparable seniority of
the Company, in accordance with and subject to the eligibility and other
provisions of such plans and arrangements.
(c) During the term of this Agreement, provided such insurance
is obtainable, the Company shall maintain in force, with Executive's designated
beneficiary, a life insurance policy providing a benefit at Executive's death of
at least Five million dollars ($5,000,000), such policy to be subject to a
split-dollar agreement between Executive and the Company providing for
reimbursement to the Company from the proceeds of such policy in the aggregate
amount of premiums paid by the Company in connection with such policy.
(d) The Company will pay or reimburse the Executive for all
reasonable and necessary travel, entertainment and other business expenses
incurred by him in connection with his duties on behalf of the Company in
accordance with the general expense policies of the Company in effect from time
to time for employees of comparable seniority of the Company, upon timely
presentation of satisfactory documentation.
(e) The Executive shall be entitled to a car allowance for the
lease, insurance, maintenance, housing and repair of an automobile in accordance
with the Company's automobile expense polices in effect from time to time for
employees of comparable seniority of the Company.
(f) The Executive shall be entitled to vacation in accordance
with the Company's vacation policies in effect from time to time for employees
of comparable seniority of the Company.
6. Place of Performance. The Executive will be based at an office
provided and paid for by the Company in New York, New York, and will travel to
such other locations throughout the world as are appropriate or required in
connection with the performance of his duties.
7. Use And Registration Of Names.
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(a) Consents. It is the desire of the Executive and the intent
of Nautica to use for any purpose whatsoever the names XXXX XXXXXXXX, VARVATOS
and XXXX XXXXXXXX COMPANY and any derivations thereof of such names now or
hereafter developed or created (the "Designer Names"), in plain block letters,
stylized letters and/or logo formats, including without limitation the Xxxx
Xxxxxxxx signature, as trademarks and service marks of Nautica (the "Marks") to
the extent that such names are available and may be used without infringing upon
the rights of any third persons. The Executive specifically consents to (i) the
use by Nautica of the Designer Names, during and following the period of his
employment by Nautica hereunder (the "Employment Period"), as trademarks and
service marks of Nautica, and (ii) the registration of the Marks, during and
following the Employment Period, as trademarks and/or service marks of Nautica
in any and all countries and jurisdictions of the world.
(b) Assignment and Acknowledgment. The Executive hereby assigns
to Nautica all rights, title and interests and his common law rights in the
Marks, including the good will attached thereto. The Executive acknowledges that
hereafter Nautica is and will be the sole owner of all right, title and interest
in and to the Marks throughout the world.
(c) Additional Documents. The Executive hereby confirms his
consent to the registration of the Marks by Nautica in all countries and
jurisdictions of the world by signing the Consent form attached hereto as
Exhibit A. The Executive agrees that from time to time during and after the
Employment Period, at the request of Nautica or its successor, assignee or
related company, he shall, without the payment of any additional consideration,
execute such additional documents as are required or useful in obtaining
registrations of any of the Marks in any country or jurisdiction, including
without limitation any form of consent required by the relevant governmental
authority of any country or jurisdiction which does not accept the form of
Consent attached as Exhibit A. In the furtherance of the Company's rights in and
to the Marks, the Executive grants to Company an irrevocable power of attorney
to execute any and all documents as may be necessary or appropriate to
effectuate such and confirm Company ownership and registration right in and to
the Marks.
(d) Additional Restrictions. The Executive agrees never to
challenge the validity of Nautica's ownership of the Marks or of any
registration or application for registration thereof. The Executive agrees that
he shall not at any time during or after the Employment Period use as a
trademark or service xxxx any name or xxxx which is confusingly similar to any
of the Marks, except as specifically permitted by Nautica.
(e) Representations And Warranties Of Executive. The Executive
represents and warrants to Nautica that (i) he has not granted any rights in the
Designer Names to any third party, (ii) to his knowledge, the use by Nautica of
the Designer Names as trademarks and service marks of Nautica will not conflict
with or infringe upon the rights of any third party, and (iii) he is not a party
to any agreement or arrangement that would prevent him from entering into this
agreement.
9. Termination of Employment. (a) By the Company. During the
employment relationship, the Company may terminate the Executive's employment
for Cause (as defined in
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Section 11), upon written notice to the Executive. If the Company terminates the
Executive's employment during the Term for Cause, the Executive shall have no
further rights hereunder after the date of early termination, all obligations of
the Company to provide compensation and benefits (including, without limitation,
the obligation to pay the Salary) shall cease, effective as of the date of early
termination, except that any unpaid Salary accrued as of such date shall be paid
to the Executive within a reasonable time of such early termination. The
Company's rights under this Agreement or otherwise, if any, against the
Executive shall survive any such termination of this Agreement.
(b) Death or Permanent Disability. In the event of the
Executive's death or "permanent disability" (as hereinafter defined) during the
Term, this Agreement shall terminate immediately, and the Company shall pay the
Executive, or the Executive's executor or other legal representative, as the
case may be, the Salary which would otherwise be due the Executive through the
date on which such termination becomes effective. For purposes of this
Agreement, "permanent disability" shall mean that the Executive is unable to
perform the essential functions of his position, with or without reasonable
accommodation, by reason of a physical or mental impairment that is reasonably
expected to be permanent.
(c) By the Executive. The Executive may terminate this
Agreement upon a Change of Control Event. For purposes hereof, Change of Control
Event shall mean:
(i) When any "person" as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
used in Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act, but excluding the Company or any subsidiary
and any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee) or any person,
entity or group specifically excluded by the Board, directly or indirectly,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) When, during any period of 24 consecutive months,
the individuals who, at the beginning of such period, constitute the Board of
Directors (the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority thereof, provided, however, that a director who
was not a director at the beginning of such 24-month requirement shall be deemed
to have satisfied such 24-month requirement (and be an Incumbent Director) if
such director was elected by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the beginning of such
24 month period) or through the operation of this proviso; or
(iii) The date of approval by the stockholders of the
Company of an agreement providing for a merger or consolidation of the Company
with another corporation where (i) the stockholders of the Company, immediately
prior to the merger or consolidation, would not beneficially own, immediately
after the merger or consolidation, shares entitling such stockholders to 50% or
more of all votes (without consideration of the rights of any class of
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stock to elect directors by a separate class vote) to which all stockholders of
the corporation issuing cash or securities in the merger or consolidation would
be entitled in the election of directors, or (ii) where the members of the
Board, immediately prior to the merger or consolidation, would not, immediately
after the merger or consolidation, constitute a majority of the Board of
Directors of the corporation issuing cash or securities in the merger.
10. Severance. (a) If the Executive's employment is terminated by
the Company for any reason other than as set forth in subsections 9(a) or (b),
the Company shall pay to the Executive, on the date of such termination, an
amount equal to the lesser of (i) 12 months base salary then in effect, if more
than 12 months of the Term remain; or (ii) the annual base salary remaining for
the Term if less than 12 months of the Term remain.
(b) If the Executive's employment is terminated by the
Executive for the reasons set forth in subsection 9(c) above, the Company shall
pay to the Executive, on the date of such termination,
(i) a lump-sum payment equal to the excess of (A) the
product of 2.90 multiplied by the "base amount" as determined for the Executive
within the meaning of Section 2806 of the Code over (B) the value on the date of
the Change of Control Event of the non-cash benefits provided under subsections
10(ii)(iv) (v) and (vi) hereof;
(ii) life, disability, accident and group health
insurance benefits substantially similar to those which the Executive was
receiving immediately prior to the Change of Control Event for a three-year
period after termination of the Executive's employment;
(iii) immediate vesting in all theretofore non-vested
benefits accrued under all bonus plans, long-term incentive compensation plans,
stock option plans, restricted stock or . similar plans or any other deferred
compensation plans or other fringe benefits or perquisites of the Company which
the Company maintains or has adopted and in which the Executive participated, or
otherwise was entitled to benefits under;
(iv) the use of professional outplacement services by
qualified consultants retained by the Executive at the expense of the Company;
(v) the automobile allowance which had theretofore been
made available to the Executive for a period of three years after the
termination of employment; and
(vi) all amounts in respect of club association or
similar fees and dues covering the Executive which had theretofore been made
available to the Executive for a three-year period after the termination of
employment.
11. "Cause". "Cause" shall mean, in respect of the termination of
the Executive's employment by the Company, (i) any act or omission which
constitutes a material breach by the Executive of this Agreement; (ii) failure
of the Executive to report to work on a regular basis during normal working
hours; (iii) a conviction or plea of guilty or nolo contendere to a felony (or
indictable offense) or a misdemeanor (or summary conviction offense) involving
moral
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turpitude; (iv) the Executive's grossly negligent or willful violation of
corporate policy or reasonable and appropriate directions from senior management
of the Company; (v) material breach of the Executive's fiduciary duties; (vi)
any statement or act by the Executive which violates the Company's personnel
policies then in effect or which reasonably might expose the Company to any
claim or legal action; or (vii) the performance of any act or failure to perform
any act (other than in good faith) to the detriment of the business of the
Company.
12. Cessation of Employment Of Xxxxxx Xxxxxxx. In the event that
during the Executive's term of employment with the Company, Xxxxxx Xxxxxxx is no
longer employed by the Company for any reason, by the latter of six months after
such cessation of employment or five years after the Division sells its first
product, the Company will be obligated to choose one of the following options to
offer to the Executive: (i) Spin-off to the Company's shareholders the Division
with the Executive as Chief Executive Officer of such entity; (ii) Sell the
Division to the Executive at fair market value, to be determined pursuant to an
appraisal performed by qualified independent appraisers selected by the Company;
(iii) pay the Executive annually an amount equal to 10% of the Division's net
income (after taxes) for so long as he remains Chief Executive Officer of the
Division. In the event the Company elects the option set forth in subsection
12(iii) hereinabove, the annual payments set forth therein will continue to the
Executive if he ceases to be Chief Executive Officer for the Division only in
the event that his employment is involuntarily terminated by the Company other
than for cause (as defined in Section 11). At anytime, the Company can elect to
cease making the annual payments provided in subsection 12(iii) hereinabove by
making a lump sum payment to the Executive in an amount equal to two (2) times
the Division's average annual net income (after taxes) for the prior three (3)
years. In no event, however, will this sum exceed $50 million.
13. Confidentiality. The Executive acknowledges that, in the course
of his employment, he has had and will have access to and has become and will
become aware of and informed of confidential and /or proprietary information
that is a competitive asset of the Company, its subsidiaries and affiliates,
including, without limitation the terms of agreements or arrangements between
the Company and any third parties, marketing strategies, marketing methods,
development ideas and strategies, personnel training and development programs,
financial results, strategic plans and demographic analyses, trade secrets,
business plans, product designs, statistical data, and any non-public
information concerning the Company, its employees, suppliers, resellers, or
customers (collectively, "Confidential Information"). The Executive will keep
all Confidential Information in strict confidence while employed by the Company
and thereafter and will not directly or indirectly make known, divulge, reveal,
furnish, make available or use any Confidential Information (except in good
faith in the course of his regular authorized duties on behalf of the Company
and for the benefit of the Company). The Executive's obligations of
confidentiality hereunder will survive the termination of this Agreement, until
and unless any such Confidential Information becomes, through no fault of the
Executive, generally known to the public or the Executive is required by law to
make disclosure (after giving the Company notice and an opportunity to contest
such requirement). The Executive's obligations under this Section are in
addition to, and not in limitation or preemption of, all other obligations of
confidentiality which the Executive may have to the Company under general legal
or equitable principles.
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14. Employee Conceptions and Developments. The Company shall own all
Intellectual Property Rights in and to, and, for the duration of such
Intellectual Property Rights have the exclusive rights of commercial
exploitation with respect to, all Conceptions and Developments made individually
or jointly by Executive during the Term or any extension thereof (the "Period").
Any application made within six months after the Period to register or protect
any Intellectual Property as to which Executive was an inventor, author or
assignor shall be presumed to have been originally made during the Period and
subject to the Company's ownership pursuant to the foregoing sentence. For
purposes hereof, the term "Conceptions and Developments" means all creative,
expressive, branding or technological conceptions, discoveries and developments
of any nature, including without limitation conceptions for products and
processes, inventions, designs, writings, graphics, animations and other works
or authorship, specifications, drawings, methods, formulas and branding
proposals, and any implementations, improvements, derivative works or
modifications thereof, and the term "Intellectual Property Rights" means all
U.S. and foreign patents, copyrights, trademarks, trade secret, publicity and
similar rights.(including without limitation any and all common law rights), and
all rights of priority under international conventions to make application with
respect thereto. All Conceptions and Developments arising during the Period by
virtue of either of the first two sentences of this Section 14 are referred to
as the "Covered Conceptions and Developments". Executive shall be obligated to
assign to the Company all inventions included in the Covered Conceptions and
Developments. All works of authorship included in the Covered Conceptions and
Developments shall be deemed "works made for hire" to the maximum extent they
may qualify as such under 17 U.S.C. Section 101, and otherwise the copyright
therein shall be deemed to have been fully assigned by Executive to the Company
at the time such works were made. All Covered Conceptions and Developments,
whether or not patentable, shall be promptly disclosed to the Company in
writing, and shall be held in confidence by Executive and treated as
"Confidential Information" subject to Section 13 hereof, until such time as the
Company, in its sole determination, shall elect to make the subject matter
thereof publicly known. All subject matter of the type that would fall within
the definition of Conceptions and Developments, if any, that Executive
conceived, invented, authored or developed prior to the Term ("Pre-existing
Developments") shall be set forth in an annex attached hereto and initialed on
behalf of both parties hereto at the time of execution hereof, and if there is
no such annex attached hereto it shall be understood that there are no
Pre-existing Developments. Executive agrees that, at the expense of the Company,
he will, without additional compensation, take any such further action,
including the rendering of all lawful testimony and assistance, and the
execution and delivery to such instruments as the Company may require from time
to time, to perfect, effectuate, register, record or enforce the Company's
rights or interests in any of the Covered Conceptions and Developments. The
Executive hereby irrevocably appoints the Company to be the Executive's
attorney-in-fact to act in Executive's name, place and stead to do and execute
any such act or instrument for the purpose of this Section. The Company shall be
under no liability to account to the Executive for any revenue or profit derived
or resulting from the use, exploitation or licensing of any of the Covered
Conceptions or Developments subject to this Section 14.
15. Employee Handbook. The provisions of the Company's Employee
Handbook are hereby incorporated into this Contract by reference. By signing
this Agreement, the Executive acknowledges that the Employee Handbook was
attached to this Agreement; that the Executive
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has read and understands all of the provisions of the Employee Handbook; that
the Executive will comply with such provisions; and that all such provisions are
part of this Agreement.
16. Consent to Jurisdiction. Both the Company and the Executive
hereby irrevocably submit to the jurisdiction of any New York State or Federal
court sitting in the City of New York in any action or proceeding to enforce
this Agreement and waive the defense of inconvenient forum to the maintenance of
any such action or proceeding.
17. Withholding taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state or other taxes as the Company is
required to withhold pursuant to any law or government regulation or ruling.
18. Representation. Each party represents and warrants that it is
fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person or entity.
19. Validity. If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.
20. Miscellaneous.
(a) The Executive agrees that he will maintain as confidential
the terms of this contract unless otherwise required by law or court order to
disclose same, or to his legal or professional advisors.
(b) The waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach thereof.
(c) Any and all notices referred to herein shall be in writing
and shall be deemed given three days after mailing in the United States, by
certified or registered mail, postage prepaid, return receipt requested, or on
the date of delivery, if delivered by hand to the Executive at the address set
forth below his signature to this Agreement and to the Company at 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(d) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns, and the Executive and
his legal representatives, heirs, legatees and distributees, but shall not be
assignable or delegable by the Executive.
(e) Except as otherwise provided in this Agreement or the
employee benefit plans of the Company, this Agreement supersedes any and all
prior written or oral agreements between the Company and the Executive or
between the Executive and any predecessor of the Company and constitutes the
entire agreement between the parties hereto with respect to such
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subject matter. No modification or amendment to this Agreement shall be
effective unless in writing and signed by both parties hereto. No omission,
delay or failure on the part of any party in exercising any rights hereunder,
and no partial or single exercise hereof, will constitute a waiver of such
rights or of any other rights hereunder.
(f) This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
(g) This Agreement is executed and delivered in the State of
New York and shall be governed by, and construed in accordance with, the laws of
said state, without giving effect to its laws or rules governing conflict laws.
(h) Notwithstanding any other provision of this Agreement, the
parties' respective rights and obligations under Sections 7, 13, and 14 will
survive any termination or expiration of this Agreement or the termination of
the Executive's employment for any reason whatsoever.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year appearing on page one of this Agreement.
NAUTICA ENTERPRISES, INC.
/s/ Xxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxx
----------------------------- ------------------------------------
Xxxx Xxxxxxxx Xxxxxx Xxxxxxx
President & Chief Executive Officer
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
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EXHIBIT A
I, Xxxx Xxxxxxxx, a citizen of the United State of America, hereby
consents to the use and registration of my name XXXX XXXXXXXX, and of the names
VARVATOS and XXXX XXXXXXXX COMPANY and any derivations thereof of such names
now or hereafter developed or created as trademarks or service marks in any
country or jurisdiction of the world by Nautica Enterprises, Inc. or its
successor, assign, or related company.
/s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Subscribed and sworn to before me
this 24th day of January, 2000.
/s/
-----------------------------------
Notary Public
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SPLIT-DOLLAR AGREEMENT
This Agreement made this 5th day of May, 2000, by and between
Nautica Enterprises, Inc., a corporation having its principal office at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx (the "Employer"), and Xxxx Xxxxxxxx (the
"Employee"):
WITNESSETH:
WHEREAS, the Employee is a valuable and experienced employee of the
Employer; and
WHEREAS, the parties desire to establish a split-dollar life
insurance plan; and
WHEREAS, the Employee has applied for, and is the owner of the
insurance policy or policies listed in Schedule A attached hereto, hereinafter
referred to as the "Policy"; and
WHEREAS, the Employer and the Employee agree to make the Policy
subject to this Agreement; and
WHEREAS, the Employee has assigned the Policy to the Employer as
collateral for amounts to be advanced by the Employer under this Agreement by an
instrument of assignment filed with the Insurer (hereinafter referred to as the
Assignment);
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. The parties hereto agree that the Policy shall be subject to the
terms and conditions of this Agreement and of the Assignment filed with the
insurer relating to the Policy. The Employee shall be the sole and absolute
owner of the Policy and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may be otherwise provided herein
and in the Assignment.
2. Any dividend declared on the Policy shall first be applied to
purchase one year term insurance and the balance if any shall be applied to
purchase paid-up additional insurance on the life of the Employee. The parties
hereto agree that the dividend election provisions of the Policy shall conform
to the provisions hereof.
3. The premium for the Policy will be paid by the Employer during
the Employee's employment by the Employer and will be allocated between the
Employee and the Employer. With regard to
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the Policy, the Employee shall contribute, while the Employee is alive, an
amount equal to the lesser of (a) the amount of the entire economic benefit
(including any economic benefit attributable to the use of the policy dividends)
attributable to the Employee, computed as provided herein, or (b) the amount of
the premiums due on the policy. The economic benefit that would be attributable
to the Employee, shall be computed in accordance with the I.R.S. Rev. Rul.
64-328, 1964-2 C.B. 11; Rev. Rul. 66-110, 1966-1 C.B. 12; Rev Rul. 55-747,
1955-2 C.B. 228; and Rev. Rul. 67-154, 1967-1 C.B. 11, as modified by subsequent
rulings or applicable statutes. The Employer shall contribute annually out of
its own funds a sufficient sum to pay the requisite net annual premiums i.e. the
full premium less the amount the Employee has agreed to contribute. The
Employee's share of the premium (term insurance allocation) shall be paid by the
Employer, as agent for the Employee and shall be charged to the Employee as cash
compensation (and for all purposes, including the Assignment, shall be deemed
cash compensation and not Employer paid premium).
4. The Assignment shall not be terminated, altered or amended by the
Employee without the express written consent of the Employer. The parties hereto
agree to take reasonable action to cause such Assignment to conform to the
provisions of this Agreement.
5. a. The Employer shall not borrow against the Policy without
the express written consent of the Employee.
b. Upon the Employee's attainment of age sixty-five (65), the
Employee shall have the right to alter the dividend option and the right to take
any action with regard to the cash value of the policy in excess of the
collaterally assigned interest of the Employer.
6. a. Upon the death of the Employee, the Employer shall
promptly take all action necessary to obtain its share of the death benefit
provided under the Policy.
b. The Employer shall have the unqualified right to receive a
portion of such death benefit equal to the total amount of its share of the
premiums paid by it hereunder (hereinafter referred to as the Net Premiums),
without interest. The balance of the death benefit provided under the Policy, if
any, shall be paid directly by the Insurer to the Employee or to such other
beneficiary or beneficiaries and in the manner designated by the Employee. No
amount shall be paid from such death benefit to the Employee or to a beneficiary
or beneficiaries designated by the Employee until the Employer or Insurer
acknowledges in writing that the full amount due to the Employer hereunder has
been paid. The parties hereto agree that the beneficiary designation provision
of the Policy shall conform to the provisions hereof.
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7. The Employer shall not merge or consolidate into or with another
organization, firm or person unless and until such succeeding or continuing
organization, firm or person agrees to assume and discharge the obligations of
the Employer under this Agreement. Upon the occurrence of such event, the term
Employer as used in this Agreement shall be deemed to refer to such successor or
survivor organization. The obligations continuing hereunder shall require future
payment of premiums only if (a) Employee's employment continues with such
organization, firm or person or (b) an Agreement or arrangement beyond this
Agreement so required.
8. a. This Agreement shall terminate upon the occurrence of the
earliest of the following events: (i) the death of the Employee and the payment
of proceeds pursuant to Section 6 of this Agreement, (ii) the Policy anniversary
next following the Employee's attainment of age sixty-five (65), or (iii) the
Employee is terminated by the Employer for Cause. For purposes of this
Agreement, Cause means in respect of the termination of the Employee's
employment by the Employer, (i) any act or omission which constitutes a material
breach by the Employee of the Employment Agreement between Employee and Employer
dated October 1, 1999; (ii) failure of the Employee to report to work on a
regular basis during normal working hours; (iii) a conviction or plea of guilty
or nolo contendere to a felony (or indictable offense) or a misdemeanor (or
summary conviction offense) involving moral turpitude; (iv) the Employee's
grossly negligent or willful violation of corporate policy or reasonable and
appropriate directions from senior management of the Employer; (v) material
breach of the Employee's fiduciary duties; (vi) any statement or act by the
Employee which violates the Employer's personal policies then in effect or which
reasonably might expose the Employer to any claim or legal action; or (vii) the
performance of any act or failure to perform any act (other than in good faith)
to the detriment of the business of the Employer.
b. Upon such termination under Section 8.a.(ii) or 8.a.(iii)
of this Agreement, the Policy shall be partially surrendered in an amount
necessary to repay the Employer the total amount of its share of the premiums
paid by it hereunder (Net Premiums), without interest. In the event the cash
surrender value of the Policy is insufficient to fully repay the Employer, the
entire cash surrender value shall be used to repay the Employer without recourse
to the Employee for the balance of the premium payments. Upon repayment of the
premiums of the Employer, the Employer shall release its interest in the Policy,
and the Employee will thereafter own the Policy free from this Agreement and the
Assignment. The Employee agrees to execute any and all documents necessary to
effect repayment of the premiums to the Employer as provided herein.
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9. If the Employee ceases to be employed by the Employer for any
reason other than Cause, the Agreement shall remain in full force and effect.
10. The parties hereto agree that this Agreement shall take
precedence over any provisions of the Assignment. The Employer agrees not to
exercise any right possessed by it under the Assignment except in conformity
with this Agreement.
11. This Agreement may not be amended, altered or modified except
by a written instrument signed by the parties hereto and may not be otherwise
terminated except as provided herein.
12. a. The split-dollar arrangement contemplated herein is an
exempt welfare plan under regulation promulgated under Title I of the Employee
Retirement Income Security Act of 1974 (ERISA).
b. For purposes of ERISA, the Employer will be the named
Fiduciary and plan administrator of the split-dollar arrangement contemplated
herein, and this Agreement is hereby designated as the written plan instrument.
c. The Employee or any beneficiary of his may file a request
for benefits with the plan administrator. If a claim request is wholly or
partially denied, the plan administrator will furnish to the claimant a notice
of its decision within ninety (90) days in writing, and in a manner to be
understood by the claimant, which notice will contain the following information:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent plan provisions
upon which the denial is based;
(iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
as to why such material or information is necessary.
(iv) an explanation of the plan's claim-review procedure
describing the steps to be taken by a claimant who wishes to submit his claim
for review.
d. a claimant or his authorized representative may, with
respect to any denied claim,
(i) request a review upon written application filed
within sixty (60) days after receipt by the claimant of written notice of the
denial of his claim;
(ii) review pertinent documents; and
(iii) submit issues and comments in writing.
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Any request or submission will be in writing and will be directed to the plan
administrator. The plan administrator will have the sole responsibility for the
review of any denied claim and will take all appropriate steps in light of its
finding. The plan administrator will render a decision upon review of a denied
claim within sixty (60) days after receipt of a request for review. If special
circumstances warrant additional time, the decision will be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt of
request for review. Written notice of any such extension will be furnished to
the claimant prior to the commencement of the extension. The decision will be
written in a manner to be understood by the claimant, as well as the specific
references of the pertinent provisions of the plan on which the decision is
based. If the decision on review is not furnished to the claimant within the
time limits described above, the claim will be deemed denied on review.
13. This Agreement shall be binding upon and inure to the benefit
of the Employer and the Employee and their respective successors and assignees.
14. Except as may be preempted by ERISA, this Agreement, and the
rights of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed by its officer thereunto duly authorized and the Employee has hereunto
set his hand, all as of the day and year first above written.
NAUTICA ENTERPRISES, INC.
By: /s/ Xxxxxx Xxxxxxx
------------------------
Title:President
/s/ Xxxx Xxxxxxxx
-----------------------------
Xxxx Xxxxxxxx
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SCHEDULE A
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Insurance Carrier Policy No. Face Amount
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New York Life Insurance 63 639 353 $5,000,000
and Annuity Corporation
